Introduction to this report:
The company released its semi-annual report for 2023. The short-term performance was slightly lower than expected. The EGR system benefits from the rapid growth of hybrid models. Downstream motor core customers and application scenarios are expected to continue to expand, which will provide strong support for medium- to long-term growth.
Key points of investment:
The target price was lowered to $28.29 to maintain the “increase in holdings” rating. The company's semi-annual report performance was slightly lower than expected. Considering the impact of factors such as the pace of downstream customer expansion and price pressure, the company's EPS for 2023-2025 was adjusted to 0.76 (-0.06) /1.23 (-0.05) /1.75 (-0.06) yuan, respectively. Considering the growth brought about by the company's hybrid EGR and driving motor cores, the company was given 23 times PE in 2024, slightly higher than the industry average. The target price was lowered to 28.29 yuan, a reduction of 15%.
Performance has achieved rapid growth, and the contribution of the new energy business has increased. In the first half of 2023, the company achieved revenue of 734 million yuan, an increase of 43.76% over the previous year, and achieved net profit of 72 million yuan, an increase of 80.62% over the previous year. By business segment, in the first half of the year, the company's new energy components business achieved revenue of 258 million yuan, an increase of 83.56% over the previous year, and EGR business revenue of 247 million yuan, an increase of 58.11% over the previous year. All businesses grew. Among them, the contribution of the new energy business increased significantly.
Net interest rates increased significantly year over year, and total expense ratios declined slightly. In the first half of 2023, the company's gross margin reached 18.96%, down 0.18 pct from the previous year, and the net profit margin reached 10.14%, up 2.58 pct from the previous year.
Among them, the company's gross margin for the Q2 quarter reached 17.22%, up 0.78 pct year on year, down 3.43 pct from month to month, net profit margin reached 8.35%, up 3.99 pct year on year, and down 3.74 pct month on month.
23H1's total expense ratio reached 9.54%, and the year-on-year decrease of 1.94 pct has been optimized.
Renewable energy will be the core driver of the company's future growth. The company has successfully moved from the commercial vehicle sector to the passenger car and new energy business. Traditional EGR has been transformed by entering the hybrid field, and new energy motor cores have also entered a release period, and the new energy business will become the core driving force.
Risk warning: Downstream traditional car companies' demand falls short of expectations, and the expansion of new energy business falls short of expectations.