Financial reporter Guan Yanan
The net profit was "cut in half", which is the report card handed over by Pangu Intelligence in the first quarter of this year.
Recently, Qingdao Pangu Intelligent Manufacturing Co., Ltd. (hereinafter referred to as Pangu Intelligent), a leading fan lubrication company in mainland China, disclosed its first quarter report for 2024. In the first quarter of 2024, the company achieved a total operating income of 82.0218 million yuan, a year-on-year decrease of 6.55%, a net profit attributable to the parent company of 13.2275 million yuan, a year-on-year decrease of 54.50%, a non-net profit of 11.8754 million yuan, a year-on-year decrease of 57.46%, a net cash flow from operating activities of -21.6033 million yuan, and the basic earnings per share of Pangu Intelligent was 0.09 yuan, and the weighted average return on equity was 0.64% during the reporting period.
Net profit in the first quarter halved year-on-year
The "rush to install" wind power has passed
As a company that produces complete sets of centralized lubrication systems, Pangu intelligent products are mainly used in core parts such as yaw, pitch, spindle and generator in wind turbines.
Benefiting from the country's policy support for the wind power industry in recent years and the opportunity of localization of imported parts, Pangu Intelligent's performance has ushered in explosive growth. Looking back, the company, which had a net profit of only 402,900 yuan in 2018, soared 12 times by the end of 2019, and the net profit reached 49 million yuan that year, and by the end of 2020, Pangu Intelligence's net profit had reached 160 million yuan, a year-on-year increase of as much as two times. In the past two years, the new installed capacity of domestic wind power has continued to grow at a high rate, which has driven the performance of Pangu Intelligent to soar. This round of "rush to install" is caused by the fact that the state will no longer subsidize wind power projects mainly onshore wind power projects from 2021.
To sum up, from 2019 to 2020, under the premise that the newly installed capacity of the wind power industry increased by 30% and 94% year-on-year respectively, the revenue of Pangu intelligent lubrication system increased by 123% and 91% year-on-year respectively. It can be seen that the company's revenue growth is closely related to the development of the industry.
However, after the "rush to install", the performance of Pangu Intelligence, which has enjoyed policy dividends unlike in the past, is facing great challenges. Not only in the context of slowing industry growth, there is a large gap between Pangu Intelligence's existing volume and comparable companies, and the company's comprehensive gross profit margin has dropped from 68.04% in 2020 to 38.78% in the first quarter of 2024, a year-on-year decrease of 10.13 percentage points. At the same time, the net profit margin in the first quarter of 2024 was 16.13%, down 17% from the same period last year.
It is worth noting that the first quarter financial report shows that Pangu Intelligent's non-operating net income reached 6.1483 million yuan, an increase of 646.25% year-on-year, mainly from the net investment income of 2.9337 million yuan, an increase of 1040.82% year-on-year, relative to the overall loss, and the company's inventory increased by 11.27% year-on-year, reaching 93.01 million yuan in sales, the company's profitability is worrying.
As for the reason for the decline in the company's performance in the first quarter, the reporter called Pangu Intelligent many times but the other party did not answer.
Funding is under pressure
Cash flow in the first quarter decreased by 466.57% year-on-year
At present, Pangu Intelligent has successively become a supplier of domestic mainstream fan manufacturers such as Goldwind Technology, Envision Energy, Shanghai Electric, Dongfang Electric, etc., accounting for more than 40% of the domestic market share of centralized fan lubrication systems, basically covering the top 10 domestic fan manufacturers in terms of sales, and has customers of internationally renowned enterprises such as Vestas, Siemens Gamesa, and General Electric.
But judging from the financial report, due to poor operating conditions, Pangu Intelligence's days can almost be described as stretched. As of the end of the first quarter of 2024, the company's notes payable and accounts payable reached 120.6627 million yuan, a year-on-year increase of 64.64%, and the net cash flow from operating activities under this influence was -21.6033 million yuan, a year-on-year decrease of 466.57%.
In the first quarter of this year, the company's compensation payable to employees decreased by 49.11% compared with the end of the previous year, accounting for 0.28 percentage points of the company's total assets, reflecting the company's situation of salary cuts or layoffs.
In the context of the slowdown in industry growth in the future, there is a large gap between Pangu Intelligence's existing volume and comparable companies. In the prospectus, Pangu Intelligent took Aidi Precision and Changling Hydraulics as benchmarking companies.
The core components and manufacturing processes of the products of the above two companies are similar to those of Pangu Intelligent Products and belong to the same hydraulic system.
From the perspective of revenue, Aidi Precision achieved revenue of 632 million yuan in the first quarter of this year, a year-on-year increase of 0.36%, a net profit attributable to the parent company of 88.27 million yuan, a year-on-year increase of 13.76%, and a non-net profit of 79.98 million yuan, a year-on-year increase of 8.42%.
Even if CITIC Securities optimistically predicts that the industry can maintain an average annual growth rate of 11% in the future, it will take at least 2-3 years for Pangu Intelligent to double its revenue to about 700 million yuan. Moreover, the doubling revenue volume is still not large in the same industry.
However, fortunately, in terms of technology research and development, Pangu Intelligent continued to increase R&D and investment, and its R&D expenses in the first quarter of 2024 reached 7.0148 million yuan, a year-on-year increase of 116.11%. It is precisely in this way that Pangu Intelligent started from the field of fan lubrication to expand the field of fan hydraulics, and finally walked in the forefront of domestic fan lubrication and hydraulic technology through more than ten years of operation.