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信质集团(002664):盈利能力持续改善 新能源零部件业务加速发展

Xinji Group (002664): Profitability Continues to Improve and Accelerate Development of New Energy Components Business

中金公司 ·  Aug 18, 2023 14:37

The performance is in line with our expectations

The company announced 1H23 results: revenue 2.021 billion yuan, up 19.23% over the same period last year; return to the mother net profit of 95 million yuan, corresponding to 0.23 yuan per share, up 35.84% from the same period last year, in line with our expectations.

Trend of development

The performance in the second quarter maintained a high growth, and profitability continued to improve. Benefiting from the strong demand downstream, the company's Q2 production and operation maintained a high growth trend, achieving a single-quarter revenue growth, month-on-month positive growth. The company's Q2 revenue was 1.03 billion yuan, an increase of 4.7% over the previous month; the net profit returned to its mother was 55 million yuan, an increase of 39.3% over the previous month. With the gradual increase in new energy business and the downward price of upstream bulk materials, the company's gross profit margin recovered rapidly in Q2. The single-quarter gross profit margins of 3Q22, 4Q22, 1Q23 and 2Q23 were 10.6%, 13.2%, 12.3% and 15.2%, respectively. We are optimistic that the gradual repair of gross profit margin will boost the company's performance and continue to improve in the future.

Riding on the Dongfeng of the new energy vehicle industry, the electric drive business continues to develop. With the continuous improvement of the penetration of new energy vehicles, the company's electric drive business is growing rapidly. The focus of the company's business is on drive motors. With the continuous pursuit of electric drive system integration, high power and multi-motors in the downstream market, the ASP of the company's drive motor business has increased from 500,800 yuan to 5000 yuan. At the same time, the rapid iteration of distributed drive and oil-cooled motor technology also improves the manufacturing process of stator and rotor and motor assembly, and drives the value up. At the customer level, the company is the core supplier of Huawei automobile electric drive system, and its products also cover domestic head vehicle factories and parts companies, such as Geely Weirui, BYD, United Microelectronics Corp, Shanghai Electric Drive, Dongfeng Electric Drive and so on. We believe that the rapid iteration of electric drive system technology and the continuous expansion of the company's customers will lay a solid foundation for the rapid development of the company's new energy business.

The two-wheeled vehicle and home appliance industry is showing a recovery trend, the company continues to increase the battery structure business. We believe that with the support of local consumer stimulus policies, consumer confidence has been gradually boosted, and the domestic two-wheeler and home appliance market may show a trend of recovery, while the company ranks first in the domestic electric two-wheeler motor stator and rotor market share, or will fully benefit from the industry growth. During the reporting period, the company continued to increase the battery precision structure business, provided 350 million yuan guarantee loan for the subsidiary Xinqian New Energy, and continued to expand the core parts business of new energy vehicles. We believe that the expansion of new business such as battery structural components is expected to help the company's performance to gain more room for follow-up development.

Profit forecast and valuation

We keep our profit forecasts for 2023 and 2024 unchanged, with a net profit of 253,328 million yuan respectively.

The current share price corresponds to a price-to-earnings ratio of 21.7 times 2024 / 16.7 times earnings for 2023 Universe. Maintain an outperform industry rating and a list price of 18.33 yuan, corresponding to 29.3 times 2023 price-to-earnings ratio and 22.6 times 2024 price-to-earnings ratio, which has 35.3% upward space compared with the current stock price.

Risk

The sales volume of the whole vehicle market is lower than expected, the expansion of new energy business is not as expected, and cost control is not as expected.

The translation is provided by third-party software.


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