Precision Tsugami (China) Corporation (1651) H2 2024 earnings summary

Executive summary

• Sales revenue for FY2024 was RMB3.12 billion, down 22.9% year-over-year, reflecting weak demand in the domestic manufacturing sector and intensified price competition.

• Gross profit margin reached a record 28.7%, up 3.1 percentage points year-over-year, due to successful cost reduction and efficiency initiatives.

• Net profit was RMB480 million, with a record net profit margin of 15.4%, down 17.1% year-over-year.

• Domestic sales declined 15.3% to RMB2.63 billion, while overseas sales dropped 48.2% to RMB487 million.

• The company continued to invest in production expansion, with a new plant in Pinghu expected to be operational in July 2024.

Financial highlights

• Gross profit was RMB896 million, down 13.5% year-over-year; gross margin was 28.7%.

• Operating profit was RMB626 million, with an operating margin of 19.3%, up 0.8 percentage points year-over-year.

• Earnings per share for FY2024 was RMB1.26, down 17.1% year-over-year.

• Net cash flow from operating activities was RMB506 million, down from RMB763 million in FY2023.

• Cash and cash equivalents: RMB678 million as of 31 March 2024; no outstanding bank loans; gearing ratio at 0.15%.

Outlook and guidance

• New product launches and capacity expansions are planned, including new CNC grinding machines and increased assembly capacity at Anhui and Pinghu plants.

• Management expects a recovery in demand for CNC machine tools, with signs of improvement in March and April 2024.

• The company aims to increase sales revenue, expand market share, and deliver investment returns through organic growth.

• The new Pinghu plant and expanded Anhui capacity are expected to boost production by 3,000–4,000 units.

• The company remains confident in long-term growth, driven by industrial upgrades and government support.