The net profit of homecoming increased by 54% in the first half of 2023 compared with the same period last year. In the first half of 2023, Admiralty achieved operating income of 406 million yuan, + 25% compared with the same period last year, and net profit of 41 million yuan, + 54% compared with the same period last year. In a single quarter, the company achieved operating income of 209 million yuan in the second quarter of 2023, + 26% year-on-year and + 6% month-on-month, and realized net profit of 23 million yuan, + 124% and + 28%, respectively. The gross profit margin of the company's low wind resistance wheel hubcap turns negative to positive with volume production, and 23Q1 excluding freight affects the gross profit margin of 19.59%, and begins to contribute profits.
The global share of hub caps is 14%, and the industry continues to grow: the company's core business is low wind resistance wheel hubcaps, traditional central caps, conventional large-size hubcaps and hub inserts (with traditional central caps and conventional large-size hubcaps). In 22 years, the company sold 46.96 million wheel caps, with a global market share of about 14% based on 4 per car. The industry has remarkable growth: 1) the low wind resistance wheel hubcap increases the range of new energy vehicles by nearly 5%, and the permeability continues to increase; 2) hub inserts provide personalized decoration / reduce wind resistance, and the configuration rate continues to increase.
The low wind resistance wheel hubcap starts with the new energy vehicle. Low wind resistance wheel hubcap for new energy vehicles, increase the coverage area to reduce wind resistance, and increase the range by nearly 5%. Model 3, Tang EV and other products have been configured one after another, and it is expected that the penetration rate of new energy vehicles will increase from 11% in 22 years to 43% in 25 years. The market size of this product is 1.1 billion yuan in 25 years. It is assumed that the long-term sales space of new energy vehicles is 20 million, and the market size of the products is 2.8 billion yuan. The company's products are matched with overseas well-known new energy car companies and customers such as shanghai passenger cars. In 20-22, the company sold 131,51.4m sets, with an income of 87.15 million yuan and a market share of 66% in 22 years.
The sales of hub insert products increase with the personalized demand. The hub insert has 5-7 wheels per wheel for fuel vehicles (personalized decoration) and new energy vehicles (reducing wind resistance). The market size is expected to increase from 900 million yuan in 22 years to 2 billion yuan in 25 years. The average unit price of the company's inserts in 22 years is about 10 yuan. In recent years, it has been equipped with rapid expansion of BYD, polar krypton and so on. In 20-22, it sold 557 + 12.75 million pieces of it. According to the calculation of 6 pieces of a single wheel, the proportion of traditional center covers or conventional large-size hub covers is 1%, 2%, 5%, and there is plenty of room for improvement.
Capacity utilization remained high and new capacity was gradually released. The company has built two factories in Guangzhou Huadu and Qingyuan in China. Orders were saturated in 2020-2022, and the capacity utilization rate measured by injection molding machines was 90%, 99%, 100%. In 23, the company plans to issue public convertible bonds to raise 350 million yuan for automobile lightweight engineering plastic parts to expand production, adding 81 million wheel inserts, 4.8 million low wind resistance wheel hubcaps, and 3000 wheel center covers. The new factory will be built in 2 years, and 30%, 90%, 100% will be released in 2-4 years.
Risk hint: customer expansion is not as expected and capacity expansion is not as fast as expected.
Investment advice: cover for the first time and give a "buy" rating. The company's low-wind resistance wheel hubcap increases with the increase of new energy penetration and production capacity; DAG enhances its ability to obtain overseas customers; it continues to reduce costs and increase efficiency; it is optimistic about the company's profit from customer expansion and product structure change. It is expected to make a net profit of 0.94 billion pounds in 23-25 years, giving it 25-30 times PE in 2024, corresponding to a valuation range of 32-38 yuan.