Brief performance review
On April 27, the company disclosed its quarterly report for '23, achieving revenue of 668 million yuan, an increase of 21.63% over the previous year; Guimu's net profit was about 21.9 million yuan, a decrease of 39.57% over the previous year; after deducting non-net profit of 177.7734 million yuan, an increase of 14.00% over the previous year.
Management analysis
1. The company's rapid revenue growth is mainly due to the coordinated development of the company's two-wheel drive strategy. The company focuses on the NEV industry, giving full play to Hefei's local advantages in building a NEV capital, as well as the advantages of the company's international layout, to actively explore new customers and projects in the field of intelligent equipment and electric control of NEV motors. In the field of intelligent equipment, on the basis of continuing to consolidate cooperation with advantageous customers such as Tesla, BYD, Volkswagen, NIO Auto, Ideal Auto, and Geely, the company's new orders continued to increase, focusing on intelligent manufacturing and equipment for electric drives, batteries, and power batteries, and developing new customers such as Volvo, Wanxiang, and Sunwoda. By the end of '22, the company's intelligent equipment business had orders of 5.223 billion yuan, laying the foundation for future revenue growth. In the field of motor and electronic control of new energy vehicles, we gave full play to our collaborative advantages with customers in the field of intelligent equipment. On the basis of serving existing customers, we quickly realized the new positions of customers such as Ideal Auto, Geely Automobile, Shangtong 5, NIO Auto, Guangzhou Automobile, Dongfeng Nissan, Dongfeng Honda, etc., laying the foundation for the future leapfrog development of the business. Due to weak demand for NEV terminals in the first quarter, the delivery volume of the company's NEV motor and electronic control parts business declined.
2. Overall profitability is under pressure, and R&D investment has increased dramatically. In 1Q23, the company's gross profit margin was 17.87%, year-on-year - 2.04pct; sales, management and R&D expenses rates were 2.81%, 5.23%, and 8.76% respectively, compared to -0.6pct, -0.9pct, and +1.4pct. The company's R&D expenses increased 44% year-on-year, mainly due to the company's sharp increase in R&D personnel to maintain the core competitiveness of its products. The company's net profit margin was 3.28%, -3.32pct year-on-year.
Profit Forecasts, Valuations, and Ratings
We expect the company's net profit to be 2.11/365/499 million yuan in 2023-25, and the current price of the company's stock corresponding to PE valuation of 26/15/12 times, maintaining the “increase in holdings” rating.
Risk warning
Overseas project implementation risk; risk of falling gross margin; risk of exchange rate fluctuations; risk of increased industry competition.