LK Technology’s （"LK Tech", or the "Company"） FY23 results were in line with our expectations, but net profits were lower than our expectations. The Company's revenue in FY23 was HK$5.9 billion, an increase of 10.0% YoY, basically in line with our expectations. The Company achieved net profits of HK$532 million in FY23, a decrease of 14.9% YoY, worse than our expectations. Among them, the die-casting machine business achieved revenue of HK$4.4 billion, an increase of 16.0% YoY. The die-casting machine business maintained rapid growth, showing that the Company's long-term growth logic is still solid. Innovations in the manufacturing process of new energy vehicles continued to drive market demand for large die-casting machines. We believe that the Company's revenue growth reflected the market's demand for the Company's die-casting machines, while the decline in net profit was mainly due to the drag down by the injection molding machine business. We will adjust our profit forecasts and target price for the Company in the next company report. However, since the fundamentals of the Company's long-term development have not changed, we will maintain our “Buy” rating.
　　The injection molding machine business dragged down the Company's overall performance. In FY23, revenue of the Company's injection molding machine business fell by 13% YoY. And the operating profit margin of its injection molding machine business further dropped to 0.1%, which significantly dragged down the Company's overall performance. We believe that under the condition of weak demand in real estate, home appliances, 3C and other industries, the injection molding machine industry has suffered a big blow. Therefore, the Company's injection molding machine business has experienced a decline in revenue and a decline in gross profit margin. The negative impact of injection molding machines on the Company's performance exceeded our expectations. However, with the rapid growth of the die-casting machine business, the impact of injection molding machines will continue to decrease.
　　The CNC machine business performance continued to perform well. The Company's CNC machine business revenue in FY23 was HK$277 million, an increase of 53.1%. The Company's CNC machine business has achieved more than 50% growth for two consecutive years. As supporting equipment for super-large die-casting machines, the Company's five-axis machining center is expected to maintain rapid growth and expand new growth space.
　　The Company's short-term poor performance is in line with our expectations, and the logic of long-term growth has not changed. In FY23, the Company was adversely affected by several macro factors, but the Company's die-casting machine business still maintained rapid growth, verifying that the demand for single-piece die-casting solutions in the new energy vehicle industry remains strong. Chinese automobile manufacturers will continue to invest in new technologies, maintaining the high demand for large-scale die-casting machines. The long-term growth logic of the Company remains unchanged.