OKE(SH:688308) Southwest Securities·2024-05-05 02:30Investment Rating - The investment rating for the company is "Buy" (maintained) [1][7] Core Views - The company reported a revenue of 270 million yuan in Q1 2024, a year-on-year decrease of 7.0%, and a net profit attributable to the parent company of 30 million yuan, down 49.7% year-on-year [1] - The increase in expense ratio and significant decline in net profit margin are attributed to insufficient scale effects and a decrease in gross profit margin [2] - The company is expected to benefit from the end of the destocking cycle in the industrial sector, with a potential new replenishment cycle on the horizon [2][6] - The domestic market for CNC cutting tools is still in the early stages of localization, presenting significant opportunities for domestic substitution [2][6] - The overseas market for cutting tools is approximately four times the size of the domestic market, and the company has increased its overseas revenue contribution from 10% in 2022 to 19% in Q1 2024 [2] Summary by Sections Financial Performance - In Q1 2024, the company's comprehensive gross profit margin was 25.1%, a decrease of 7.2 percentage points year-on-year, primarily due to insufficient capacity utilization of CNC cutting tools [5] - The expense ratio for Q1 2024 was 15.0%, an increase of 6.0 percentage points year-on-year, with R&D expenses rising by 2.9 percentage points [2][5] Future Outlook - The company is projected to achieve net profits of 200 million yuan, 280 million yuan, and 390 million yuan for the years 2024, 2025, and 2026, respectively, indicating a compound annual growth rate of 33% over the next three years [7][8] - The revenue growth rates for the years 2024, 2025, and 2026 are expected to be 32.27%, 28.70%, and 27.21%, respectively [8] Market Position - The company is positioned as a leading domestic manufacturer of cutting tools, focusing on enhancing product quality and cost-effectiveness to expand its presence in overseas markets [2][6]