The company's 2022 2022Q4 achieved revenue of 1,503 billion yuan, +49.5% year on year; it achieved net profit of 83.61 million yuan (loss of 16.38 million yuan in the same period last year). The company's 4Q22 performance fell short of market expectations, mainly because production capacity in North America was in the investment stage. The company achieved revenue of 1,372 million yuan in 2023Q1, +22.1% year on year; it achieved net profit of 154 million yuan, +7.4% year on year. 1Q23 performance was in line with market expectations, and business conditions were repaired quarterly. The 2023/24 EPS forecast was maintained at $0.86/1.08, and the new 2025 EPS forecast was added at $1.31. The company was given a valuation of 20xPE in 2023, corresponding to the target price of 19 yuan, maintaining the “buy” rating.
Performance remained steady, and ceiling controllers grew rapidly. The company achieved revenue of 5.146 billion yuan in 2022, +22.3% year on year, and achieved net profit of 570 million yuan to the mother, +37.0% year on year. Among them, 4Q22 achieved revenue of 1,503 billion yuan, +49.5% year-on-year, +8.6% month-on-month; achieved net profit of 83.61 million yuan (loss of 16.38 million yuan in the same period last year), -52.3% month-on-month. The company's 4Q22 performance fell short of market expectations, mainly due to the fact that the new base was in the investment stage compounded fluctuations in raw material prices and the downturn in the downstream market. The company achieved revenue of 1,372 million yuan in 1Q23, +22.1% year on year; it achieved net profit of 154 million yuan, +7.4% year on year. The performance was in line with market expectations and reflected the company's operating resilience. In 2022, the company achieved sales revenue of 415 million yuan for ceiling central controllers, +109.0% over the same period last year, accounting for 8.1% of total operating revenue. Compared with the same period last year, the number of ceiling products grew rapidly, which became the main source of the company's revenue growth in 2022. We believe that the company's sun visor business has become a global leader, while continuing to expand new categories such as headrests and ceilings horizontally. It is expected that new production capacity will gradually rise in the future, driving up profitability.
Gross margin was gradually restored, and operating efficiency was steady. The 4Q22 company's gross margin was 13.1%, +2.6pcts year on year, -13.7 pcts month-on-month. 4Q22 gross margin declined sharply month-on-month, mainly due to the company's North American production capacity being invested in the investment stage, compounded by rising raw materials and labor costs. The 4Q22 fee rate was 9.7%, -7.7 pcts year on year and -1.5 pcts month on month. The cost side continued to improve, mainly due to the company's strong promotion of overseas integration and the decline in management expenses. Among them, in 4Q22, the sales expense ratio was 0.4%, +0.7 pct year on year, -2.2 pcts month on month; management expense ratio was 5.2%, year on year -4.7 pcts, -2.4 pcts month on month; R&D expenses rate was 4.9%, -0.6 pct year on year, +1.7 pcts month on month; financial expense ratio was -0.8%, year-on-year -3.2 pcts, +1.5pcts month-on-month. The financial expense ratio improved year-on-year, mainly due to exchange rate changes. The company's gross margin in 1Q23 was 27.5%, -0.3 pct year on year and +14.4 pcts month-on-month. The 1Q23 fee rate was 14.8%, +2.0pcts year on year, +5.1 pcts month on month, of which the sales expense rate was 1.8%, the same year on year, +1.4pcts; the management expense ratio was 6.5%, -0.1 pct year on year, +1.3 pcts month on month; the R&D expenditure rate was 3.7%, flat year on year, -1.2 pcts month on month; financial expense ratio was 2.8% year on year, +2.0pcts year on year, +3.6 pcts month on month. We believe that as the automobile price war trend slows down and downstream customer sales recover quarterly, the company's capacity utilization rate will gradually pick up, and the company's profit level is expected to continue to improve as the company releases products with high bicycle value, such as roofs and headrests.
The acquisition of Motus, a leader in the field of sun visors, continues to advance globalization. The company's sun visor business is a global leader, with a global market share of about 40%. In 2022, the company's sun visor business achieved sales of 56.52 million units, +23.2% year on year; the visor business achieved revenue of 3.66 billion yuan, +23.6% year on year. The sun visor racetrack is vast. According to the company's convertible bond collection brochure, the market size exceeded 1.6 billion US dollars in 2022 and is expected to reach 2.3 billion US dollars in 2028. Since acquiring Motus, the second largest sun visor company in North America, the company has become the world's largest automotive sun visor supplier. Currently, its market share in North America is close to 80%. In recent years, by continuously promoting the integration of Motus, the company used Motus' Mexican plant to produce sun visors and ceiling central controllers on the production layout side, leveraging its scale advantage on the procurement channel side to reduce the cost of outsourced accessories such as light bulbs.
The company has production bases and R&D centers in Shanghai, Zhejiang, the United States, France, Mexico, etc., and has established overseas sales and service network companies in Japan, South Korea, Germany, the United Kingdom, Spain, the Czech Republic and other countries. The company has established a global marketing and service network covering 18 countries. In recent years, the company has successfully entered the North American Japanese supply chain through Motus, and the globalization process continues to advance.
The range expanded smoothly, and the expansion of ceiling production capacity helped the growth. The technology for the company's core product, the sun visor, is mature, and the roof of the same passenger car roof system has a high degree of homogeneity in process and materials. The company has expanded its product range to automotive interior parts products such as headrests and ceiling central controllers by accumulating many years of service experience and interior parts solution capabilities for automakers, and the product matrix continues to expand. In October 2022, the company issued a convertible bond announcement. It plans to issue no more than 1,498 million yuan for the Mexican automotive interior parts industry base construction project, Zhoushan's construction project with an annual output of 700,000 sets of roof products, etc., and the production capacity of roof products will be further expanded. In 2022, the company achieved sales of 4.09 million ceiling central controllers, +95.1% over the same period last year. The growth rate was significantly higher than that of other product lines, making it the second curve of the company's performance growth. We believe that as a global leader in sunshades, the company has successfully achieved in-depth support for well-known car companies such as GM, Tesla, Chrysler, Ideal, NIO, and Xiaopeng in North America, and is expected to use its own scale and customer advantages to empower the roof business.
Risk factors: The prosperity of the automotive industry is declining; the company's product development progress falls short of expectations; the company's new products and new customer expansion fall short of expectations.
Profit forecast, valuation and rating: The company is a global leader in the field of automotive sun visors, with a global market share of around 40% for sun visors. At the same time, the company actively lays out high-value headrests and ceiling tracks. Headrest products are successfully distributed, and it is expected that the proportion of support for Chrysler and Ford will be further increased in the future; ceiling system integration products have received orders from new North American car builders and other customers, which is expected to contribute to the company's revenue growth. Considering that the company's roof business is developing smoothly, the leading position of sunshades is stable, and the customer penetration rate has upward momentum, we maintain the company's 2023/24 EPS forecast at 0.86/1.08 yuan, and the new 2025 EPS forecast at 1.31 yuan. Referring to the industry's PEG=1 average, combined with the company's CAGR forecast for the next three years of performance of 24%, we gave the company a valuation of 20xPE in 2023, corresponding to the target price of 19 yuan, maintaining the “buy” rating.