Incidents:
The company published its 2022 annual report and 2023Q1 quarterly report. In 2022, the company achieved revenue of 16.382 billion yuan, up 31.73% year on year, and realized net profit of 809 million yuan, up 142.69% year on year. Among them, 2022 Q4 revenue was 4.706 billion yuan, up 20.17% year on year, up 5.72% month on month, and net profit of 215 million yuan, up 119.98% year on year, down 11.49% month on month.
2023Q1 achieved revenue of 3.614 billion yuan, up 3.49% year on year, down 23.21% month on month, and net profit of 224 million yuan, up 26.94% year on year and up 4.09% month on month.
Investment summary:
The company focuses on the lightweight business of aluminum alloys and magnesium alloys, while optimizing the price settlement linkage mechanism to enhance overall profitability. The automotive aluminum alloy wheel business Kaji New Energy Circuit has developed strategic cooperation with mainstream new energy vehicle companies. In 2022, it achieved revenue of 6.39 billion yuan, up 36.5% year on year; sales volume was 18.7.04 million units, up 18.9% year on year. Among them, aluminum alloy wheels for new energy vehicles accounted for 29.5%, up 14.8 pct year on year; unit price was 341 yuan/piece, up 14.9% year on year, mainly due to rising aluminum prices. As a global leader in the magnesium alloy deep processing business, the main products of the company's magnesium alloy die casting business include powertrains, front-end carriers, instrument panel frames, rear hatchback door inner panels, side door inner panels, etc. With upstream magnesium supply and demand for lightweight downstream vehicles, the penetration rate of magnesium alloy products is expected to gradually increase, and the company's first-mover advantage is obvious. In 2022, revenue was 4.61 billion yuan, up 62.5% year on year; sales volume was 155.41 million units, up 3.5% year on year; unit price was 297 yuan/piece, up 57.1% year on year, mainly due to rising magnesium prices and larger die castings.
The general aviation aircraft business is operating steadily and orders are sufficient. In 2022, it achieved revenue of 20.01 billion yuan, 11.4% over the same period.
With the increase in the market ownership of Diamond Aircraft, the company's after-sales service business has been steadily improving. At the same time, the company continues to develop and launch new models with high added value, such as the DA50, DA62, and eDA40, increasing the unit price of the product.
Gross margin improved markedly. The gross profit margin in 2022 was 18.46%, up 2.37 pct from the previous year; among them, the gross profit margin for lightweight automobiles was 17.02%, up 3.68 pct from the previous year, and the gross profit margin for general aviation aircraft was 28.79%, down 3.57 pct from the previous year.
The gross profit margin of 2023Q1 was 21.4%, up 1.93 pct year on year and up 2.18 pct month on month. In 2022, the subsidiary Shanghai Dacro Coating Industrial's goodwill was reduced by 39 million yuan, which had a certain impact on net profit.
Investment advice:
We forecast that the company's revenue for 2023-2025 will be 17.492 billion yuan, 19.673 billion yuan, and 21,792 billion yuan, up 6.77% year on year; net profit from the mother's mother is 1,052 billion yuan, 1,321 billion yuan, 1,679 billion yuan, up 30.02%, 25.56%, and 27.13% year on year. Corresponding PE is 12.7, 10.1, and 7.9 times, respectively. Based on comparable company valuations, the company was given a valuation of 20 times PE in 2023, corresponding to a stock price of 9.82 yuan, maintaining a “buy” rating.
Risk warning:
Automobile sales fall short of expectations; general aviation aircraft sales fall short of expectations; overseas business risks; rise in raw material prices; risk of exchange rate fluctuations.