Incidents: (1) The company released its 2022 annual report, with annual revenue of 1.47 billion yuan, +1.9% year on year; net profit returned to the mother for the year was 210 million yuan, +5.9% year on year. Looking at the split, Q4 revenue was 400 million yuan, +5.3% year on year, +11.0% month on month; net profit of Q4 was 45.04 million yuan, +89.0% year on year, and -5.6% month on month. (2) The company released its quarterly report for '23, achieving revenue of 380 million yuan, -7.5% year on year, -5.2% month on month; achieving net profit of 43.144 million yuan, -49.84% year on year, -4.6% month on month; (3) the company plans to issue another 550 million yuan of convertible bonds for the “New Energy Vehicle Key Component Production Base Construction Project” and supplementary liquidity projects.
Differential/Aerospace is an important growth point for the company, and synchronizer revenue has declined. The company's differential business achieved revenue of 120 million yuan in '22, up 209.8% year on year, creating a revenue increase of 80 million yuan, the company's biggest revenue growth point in 2022; aerospace achieved revenue of 190 million yuan, up 39.9% year on year, creating an increase of nearly 0.6 billion yuan in revenue; in terms of synchronizer systems (synchronizer+joint teeth), revenue reached 990 million yuan throughout the year, down 10.8% year on year, and revenue fell 120 million yuan, mainly affected by the downturn in the commercial vehicle industry.
The year-on-year decline in Q1 was mainly affected by a high base. The high net profit of the 22Q1 company is mainly due to higher aerospace revenue and higher profit margins. 23Q1 expects the profit margin of the company's aerospace business to have declined. Furthermore, according to data from the China Automobile Association, 23Q1 fuel vehicles fell by about 16% year on year. The main application area of the company's synchronizer system was fuel vehicles, and it is estimated that revenue and profit were also negatively affected to a certain extent.
Differential differentials are expected to continue to rise, and investment in motor shafts will create new growth points. Looking forward to the future, the company still has good growth potential. On the first side, the company's differential is progressing smoothly. The company has carried out many collaborations with customers such as BYD, Dana, Geely, Great Wall, NIO, Ideal, etc. Some products have already been mass-produced. It is expected that differential revenue will continue to rise in '23; on the second aspect, the company's commercial vehicle business is also expected to achieve good growth in the context of the recovery of the heavy truck industry; on the third, the company is actively promoting 2 million motor shaft projects, according to estimates of 150-200 yuan per piece of convertible bonds. According to estimates of production of 150-200 yuan per piece, the project will reach full maturity. It is expected to bring about an increase in revenue of 3-4 billion yuan.
Profit forecasts and investment recommendations. The company's EPS for 2023-2025 is expected to be 0.59/0.73/0.99 yuan, with a compound annual growth rate of 22.77% in three-year net profit. The company was given 22 times PE in 2023, corresponding to the target price of 12.98 yuan, maintaining the “buy” rating.
Risk warning: the risk of fluctuations in raw material prices, the risk of a sharp decline in profit margins due to price cuts by OEMs, and the risk that the progress of new business falls short of expectations.