29 Jun 2023

Precision Tsugami (China) (PTC) FY23 turnover decreased by 8.4% YoY to Rmb4.0bn while NP was down by 13.2% YoY to Rmb579.2m. While top line came in in-line with our estimate, bottom line beats our expectation by 19% on better-than-expected GPM. The decrease in turnover was due to the resurgence of COVID-19 along with strict prevention and control measures in China last year and geopolitical uncertainties of certain countries. The tightened capital expenditure of most downstream customers of PTC, softening the demand for machine tools. During the year under review, market demand for CNC machine tools continued to decline and the CNC machine tool industry was in a downward adjustment phase. GPM was under pressure in FY23 due to weak sales. However, benefiting from the decrease in raw materials in 2H22 and substantial improvement in cost reduction and efficiency enhancement, which partially offset the impact of margin erosion. As a result, PTC’s FY23 overall GPM only edged down marginally by 0.9ppt YoY to 25.6%.

CROSBY Research – Precision Tsugami (China) (1651HK/BUY): Challenging year but healthy financial helped pull through bad time