The 2022 results are generally in line with our expectations
The company announced its 2022 results: 2022 revenue of 301 billion yuan, -14.54% year on year; net profit of the mother was 915 million yuan, +59.37% year on year. 4Q22 revenue was 8.069 billion yuan, -17.08% year on year, +3.33% month on month; net profit of the mother was 198 million yuan, +104.58% year on year, -25.28% month on month. It is in line with previous performance forecasts.
Development trends
The decline in the prosperity of the light truck and light passenger car industry has put pressure on revenue levels, and the rise in passenger car sales of SUVs is a highlight of performance. In 2022, the company achieved total vehicle sales of 282,008 vehicles, or -17.30% year on year, of which 77,237 were light buses, -23.92% year on year; 64,727 trucks, -45.20% year on year; 62,872 pickups, -7.41% year on year; and 77,172 SUVs, +44.30% year on year. On a quarterly basis, 4Q22 sold a total of 133,337 vehicles, +85.93% over the previous month. Among them, light buses, trucks, and pickups were +136.79%/+398.91%/+32.70% month-on-month, supporting annual performance. Affected by poor logistics, overall sales in the light truck and light passenger industry were weak, which dragged down the company's truck and bus sales to a large extent, but SUV sales bucked the trend and achieved rapid growth. Looking ahead, we believe that the gradual improvement in the commercial vehicle market in 2023 is expected to drive the company's sales into an upward phase. Combined with the launch of new products such as the new Domino, Light Bus, and Ford high-end pickups, it is expected to drive the revenue growth rate of various businesses to improve.
Profitability remained stable under external cost fluctuations, and the balance and liability structure improved year-on-year. Gross margin in 2022 was 14.25% (gross profit calculation does not include taxes and surcharges), -0.25ppt compared to the previous year, 4Q22 gross margin was 13.97%, +1.99ppt/-2.29ppt compared to the same period, mainly due to the increase in upstream costs due to rising raw material prices and a shortage of chip supply. Net profit increased sharply year over year, mainly due to: 1) government subsidies of 943 million yuan, including current profit and loss; 2) asset disposal revenue of 391 million yuan generated by the disposal of land and ground buildings at the Qingyunpu factory. The balance ratio was -1.18ppt to 66.36% year on year, and the capital structure was stable. We believe that the decline in raw material prices and the continued layout of the passenger car sector will support a steady, moderate and positive gross margin and help increase performance resilience.
Continued investment in product replacement and new product development, new brands fill the gap in the domestic pickup truck market. The company consolidates the advantages of light commercial vehicles and expands the passenger vehicle business in parallel, promotes brand upgrading, and accelerates the establishment and promotion of new energy brands. The launch of high-quality production and launch of the new Yuhu, the next generation of new light buses, Ford's high-end pickups, new-generation light trucks, and various new energy models reflects the company's continuous improvement in product competitiveness. In March, the company launched the new brand Jiangling Avenue, which simultaneously pioneered a full-scenario technical architecture and new models to open up the middle and high-end pickup categories. We expect to contribute new growth points.
Profit forecasting and valuation
The 2023 profit forecast remained basically unchanged, and net profit of 2024 was introduced for the first time. Currently, A-shares correspond to 2023/2024 13.0/10.4x P/E. A-shares continued to outperform industry ratings and the target price of 16.00 yuan, corresponding to 15.2/12.1x P/E in 2023/2024, with 16.5% upside from the current stock price.
risks
Raw material costs continued to rise, vehicle sales fell short of expectations, and new product launches fell short of expectations.