Kunming Machine Tool's gross margin has picked up

Kunming Machine Tool achieved operating income of RMB 338 million in the first quarter of 12 years, a year-on-year decrease of 5.72%; net profit attributable to the parent company was RMB 5.15 million, a year-on-year decrease of 77.26%, and EPS was RMB 0.01. The sharp decline in performance was mainly due to the declining trend of the machine tool industry since the fourth quarter of the 11th.

Business Analysis The slow recovery of the machine tool industry: In the first quarter, the output of domestic metal-cutting machine tools was 180,000 units, an increase of 3% year-on-year, of which the output of CNC metal-cutting machine tools was 44,800 units, a year-on-year decrease of 15.89%. The monthly output of CNC gold-cutting machines began to decline month-on-month in the second half of 11 and fell to the lowest level in January 12 when the monthly output was only 10,000 units. From the situation in February and March, the output of CNC gold-cutting machines began to gradually rise. , March output has been restored to 19,000 units.

Consolidated gross profit margin rebound: In the first quarter of 2012, the company's consolidated gross margin was 26.93%, which was 3.84 percentage points higher than the 23.09% in the same period in 11 years, and it was also 2.12 percentage points higher than in the fourth quarter of 11 years. The profit margin is gradually picking up. This may be related to the delivery structure of the product.

The administrative expenses increased more: The company's administrative expenses for the first quarter was 48.89 million yuan, an increase of 46.43% over the same period of the previous year, mainly because the company increased R&D investment to adjust its product structure, and its R&D expenses increased by 10 million yuan year-on-year. In addition, various repair fees, wages and various social security fees, business promotion fees and other expenses increased by 4 million yuan over the same period last year. The management fee rate in the first quarter was 14.45%, which was an increase of 5 percentage points over 11 years.

Decline in investment income: The company’s investment income in the first quarter was -0.71 million yuan, which was mainly due to the decline in net profit of the joint venture company Kunming Daos and its associated company Xi'an Reiter.

Inventory pressure remains high: The company's ending inventory increased by 16.35% year-on-year to RMB 979 million. Inventories decreased by 4.4 million yuan compared with the beginning of the year, of which, the products increased by 8.4 million yuan, the raw materials decreased by 1.1 million yuan, and the inventory of finished products decreased by 11.7 million yuan. The reason for the large increase in products is that some parts with long production cycles are required to be pre-invested at the beginning of the year, and the reason for the increase in inventory production is that customers of customized products fail to pick up goods in time due to financial constraints. In the first quarter, the trend of declining machine tool demand continued, and the company expects inventory pressure to remain high for the next 12 years.

The introduction of high-end products to enhance competitiveness: The company's proprietary technology for the introduction of the Hans beam gantry with a 2,000-mm-diameter double-column gantry machine tool has resulted in the completion of business negotiations and the project has been officially launched.

The number of new orders rose, and the numerical control rate increased: The Company's new orders increased by RMB 260 million in the first quarter, which was a decrease of nearly 60% compared with RMB 649 million in the first quarter of 11 years, while the current advance receipts amounted to RMB 425 million. , a 24% reduction from the same period in 11 years. The company's new orders in the first quarter rose 26.21% month-on-month, should be a seasonal rise, but reversed the downward trend in the order of the first three quarters (11, 2, 3, and 4 quarters were 598,474 and 206 million) . In the first quarter, the NC ratio of orders was 72.40%, up 12% year-on-year and 7 percentage points higher than the previous quarter. From the perspective of the growth of orders and the rate of numerical control, the company's profitability trend is positive.

With tight funding and short-term borrowings, the company has increased bank short-term loans due to tight liquidity. Short-term loans in the first quarter were 145 million yuan, an increase of 45 million yuan over the beginning of the year.

The monetary funds in the first quarter were 148.6 million yuan, a year-on-year decrease of 47% and a decrease of 23% from the previous quarter.

The operating cash flow dropped drastically: The company's cash flow from operating activities was a net outflow of 39.67 million yuan, which was significantly more than the net outflow of 6.92 million yuan in the same period of 11 years, mainly due to the tightening of monetary policy since the second half of 11 years, and the decline in market demand. , The company's sales decreased, users delayed delivery, increased inventory, sales return decreased due to other reasons.

Earnings Forecasts and Investment Recommendations Given the slow recovery of the machine tool industry and the slowdown in orders for the company's machine tool products, we have revised down our revenue forecast for the company, while the overall gross profit margin has increased in the first quarter. We maintain our previous earnings forecast and expect to start operating in the next 12-14 years. Revenue is expected to be 1,830, 2,027 and 2,279 million yuan, and net profit is 78.16, 93.65 and 109.72 million yuan, respectively, an increase of 43.23%, 19.82% and 17.16%, EPS is 0.147, 0.176 and 0.207 respectively. yuan.