The replacement market led to an increase in sales, and revenue reached a record high in the fourth quarter alone. In 2022 as a whole, the company's annual sales volume of low-voltage lead-acid batteries for automobiles reached 32.21 million KVAH, an increase of 2% over the previous year. The cumulative sales volume of the supporting market fell 11% year on year, with a market share of 49%; the cumulative sales volume of the replacement market increased 8% year on year, with a market share of 30%. The company achieved annual sales revenue of 13.4 billion yuan, an increase of 8% over the previous year; Guimu's net profit was 4.7 billion yuan, a decrease of 43% over the previous year. In the fourth quarter alone, the company achieved sales revenue of 3.9 billion yuan, an increase of 18% over the previous year and an increase of 11% over the previous year; Guimu's net profit was 171 million yuan, an increase of 8% over the previous year and an increase of 78% over the previous month. Production and sales in the domestic commercial vehicle industry fell by more than 30% year on year in 2022, leading to a decline in the company's supporting sales. However, the company continued to promote the construction of channels for maintenance and replacement markets, which led to an increase in overall sales revenue.
Multiple factors have put pressure on profit margins in the short term, with significant month-on-month improvements in the fourth quarter alone. In 2022 as a whole, the company's sales/management/R&D/financial expenses ratio was 4.80%/2.74%/1.39%/0.23%, respectively, which was -0.03/-0.19/+0.18/-0.71 percentage points, respectively. The gross profit margin was 14%, down 3 percentage points from the previous year; the net profit margin was 3%, down 3 percentage points from the previous year. In the fourth quarter alone, the company's sales/management/R&D/financial expenses ratio was 5.06%/2.36%/1.35%/0.29%, respectively, +1.09/-0.71/-0.15/-0.48 percentage points, respectively. Gross profit margin was 16%, up 3.58 percentage points year on year, up 3.76 percentage points month on month; net profit margin was 3.97%, down 0.98 percentage points year on year, up 1.32 percentage points month on month. In 2022, the share of recycled lead business with low gross margin increased, shipping costs and raw material costs such as plastics and sulfuric acid rose. Epidemic control in some regions caused the company's delivery costs to rise. Multiple factors led to a year-on-year decline in the company's gross margin and net interest rate. However, in the fourth quarter alone, as the impact of the epidemic subsided and the cost of raw materials and the like fell, the company's profit margin improved significantly from month to month.
The construction of terminal channels was accelerated, and low-voltage lithium batteries received 26 project targets. In terms of supporting markets, the company completed the introduction and switching of 55 model projects throughout the year, and targeted 62 projects. Among them, new energy projects include Volkswagen MEB, AITO, Geely, Zero-Run, and GAC Aian. In terms of replacement markets, by the end of 2022, the construction of more than 2,600 service providers and more than 84,000 terminals had been completed, and the country's county-level regional terminal coverage rate reached 96%. In terms of low-voltage lithium batteries, 12V/24V/48V lithium battery products have received project targets from high-quality car companies such as BMW, Chery, Geely, Yutong, and Dongfeng Xiaokang respectively.
Risk warning: The sales volume of new energy vehicles fell short of expectations, and price competition in the automotive industry is fierce.
Investment advice: Lower profit forecasts slightly to maintain the “buy” rating.
Considering the intense price competition in the automobile industry and the contraction of profit margins in the industrial chain in 2023, we lowered our profit forecast slightly. We expect net profit for 2023/2024/2025 to be 898/10.79/1,357 million yuan respectively (originally 2023/2024 was 904/1,197 million yuan respectively), and the corresponding PE was 11/10/8 times respectively, maintaining the “buy” rating.