Core viewpoints

In the third quarter of 2023, the company's performance improved significantly and its profitability increased significantly, mainly due to the continuous growth of demand in the ① new energy vehicle industry, the fixed-point volume of the company's customers, the reduction of ② raw material costs, and the active implementation of technology cost reduction, joint cost reduction and superimposed fee reduction.

Looking to the future: ① focuses on the power system of new energy vehicles, with obvious advantages of first-mover technology; ② continues to expand production capacity and increase automation construction; ③ and Bosch Rexroth set up a joint venture to expand the field of industrial vehicles and continue to open up the company's business growth space.

Event

In the first three quarters of 2023, the company achieved revenue of 1.26 billion yuan, a decrease of 8.48% over the same period last year, a net profit of 43 million yuan, an increase of 32.31%, and a net profit of 5.2595 million yuan, an increase of 2907.06% over the same period last year.

Of this total, Q3 achieved revenue of 540 million yuan in a single quarter, an increase of 6.25% over the same period last year, a net profit of 72 million yuan, an increase of 1304.91% over the same period last year, and a net profit of 47 million yuan, up 952.11% over the same period last year.

Brief comment

Q3 revenue stabilized, mainly benefiting from the continuous growth of downstream demand and the revenue stabilization of 2023Q3, mainly due to the continuous growth of demand for new energy vehicles downstream of ①. According to the China Automobile Association, domestic production and sales of new energy vehicles completed 6.313 million and 6.278 million respectively in the first three quarters, an increase of 33.7% and 37.5% respectively over the same period last year, and the market penetration reached 29.8%. ② fixed-point customer volume: in 2022, the company adopted the flat-line motor program of the "integrated core" six-in-one drive system to obtain Geely Automobile, SAIC Chase, Jianghuai Automobile, Dongfeng Automobile, Hezhong Nezhong and many other car companies fixed points, new energy vehicles multi-in-one power system products from the fixed point to the mass production cycle is longer, 2023Q3 began to obtain the customer fixed point gradually.

The decline in raw material costs, technology costs and the rate of expenses during the period contributed to the improvement of profitability in the first three quarters of 2023. The company's gross profit margin and net profit margin were 15.08% and 3.42% respectively, an increase of 1.74,1.06 pct respectively over the same period last year.

The increase in gross profit margin is mainly due to the fact that the raw materials of ① mainly include electronic components, magnetic steel, silicon steel sheet, enamelled wire and aluminum structural components, etc., the prices of enamelled wire and aluminum have fallen since the second half of 2023, the prices of bulk materials such as permanent magnets have dropped, and the cost side has dropped; ② has continued to accumulate technology to achieve technology cost reduction, quality improvement and efficiency improvement. ③ Company gives full play to the ability of supply chain management, strengthens the partnership with suppliers, implements joint R & D strategy and realizes joint cost reduction in order to cope with the cost pressure of market competition.

The increase in net interest rate is mainly due to the increase in ① gross profit margin; the expense rate during the ② period was 14.46%, which was 0.09% lower than the same period last year. Specifically, in the first three quarters, the sales expense rate, management expense rate, financial expense rate and R & D expense rate were 2.09%, 3.50%, 0.42% and 8.45%, respectively, and + 0.13, + 0.27,-0.31 and-0.17 pct respectively in the first three quarters.

The technology first-mover advantage of the company is obvious, the production capacity expansion is advancing rapidly, and the technology first-mover advantage of the joint venture with Bosch in the field of industrial vehicles is obvious: ① focuses on the power system of new energy vehicles and becomes one of the few leading companies in the field of new energy vehicles with both drive system and power system product matrix. In 2023, the company realized the automation, large-scale and platform production of the six-in-one power system, developed the third generation power system with high power density, and realized highly automated mass production this year. The scheme design of the fourth generation drive system of high voltage oil cooling technology has been completed and the product verification will be realized in 2023. ② is the only domestic enterprise that can realize the mass production of high-voltage and high-current IGBT single-tube parallel electric control products. Relying on the three underlying core patent technology of motor controller, the exclusive innovative design of circular motor controller is less than 50% of the same power grade electric control products in the market. The power density reaches 120kW/L, and the "integrated core" drive assembly products with light weight, small size, low cost and high power density have been developed, which can provide customers with efficient and mature power system integrated solutions for new energy vehicles from A0 to C class.

③ platform construction continues to advance, the company through the introduction of advanced and more automated production lines and assembly equipment to achieve the drive assembly line "dedicated line" and customer production capacity "distribution according to demand", to achieve the requirements of intelligent chemical plants, help the company to provide power system universal solutions to different car companies, to achieve economies of scale and production efficiency.

Continue to expand production capacity and increase automation construction: ① in August 2022, the company listed additional shares, the net capital raised this time is 963 million yuan, the funds are mainly used for the production capacity construction of Zhuhai base and Shandong Heze base. After the completion of the project, the Zhuhai production base will reach the annual production capacity of 300000 sets of drive assemblies and 300000 sets of power assemblies; the Shandong base will have the production capacity of 200000 sets of A00-class motor controllers, 200000 sets of A00-class motors, 100000 sets of special vehicle motor controllers, 100000 sets of special vehicle motors and 200000 sets of power supplies and power assemblies. In order to further consolidate its market position and competitive advantage and meet the capacity reserve requirements of the key customer strategy, ② launched a convertible bond financing project to build a high-standard powertrain automation workshop, which will further improve the level of production automation, meet the power system requirements of B-class and C-class models, and optimize the company's customer structure.

Set up a joint venture with Bosch Rexroth to expand the field of industrial vehicles: on September 12, 2023, Zhuhai Yingbo Electric Co., Ltd. and Robert Bosch's "RBINT" and "Bosch China" plan to set up a joint venture company. This foreign investment is to continuously enhance the company's core competitiveness and profitability. Important measures to speed up the expansion of the core parts business of OHW new energy industrial vehicles at home and abroad.

Profit forecast and investment suggestion

Since its inception, the company has focused on the R & D and production of the core components of the electric drive of new energy vehicles, and has a technological lead in the single-tube parallel scheme.

Looking to the future, with the rapid development of new energy vehicles, the company is expected to rely on more cost-effective, higher energy density products to continue to increase market share.

It is estimated that the net profit from 2023 to 2025 is 59.91,99.86 and 138.29 million yuan respectively, an increase of 143.51%, 66.69% and 38.48% respectively over the same period last year, and the corresponding PE is 82.48,49.48,35.73 times respectively, maintaining the "buy" rating.

Risk analysis.

① industrial policy adjustment and risks faced by the industry: the new energy vehicle industry is the key support industry of the national strategic development, and is expected to become the pillar industry of the national economy. From the perspective of the industry, the development of new energy vehicles still faces many challenges, such as price fluctuations of raw materials such as batteries and bulk materials, changes in electricity price policies, and so on, which may lead to fluctuations in production and sales in the new energy vehicle industry. thus having an impact on the company's product demand.

② customer demand fluctuation and product competition aggravate the risk: on the one hand, traditional fuel car companies introduce strong promotion policies, and potential consumers are diverted by short-term sales of fuel vehicle products; on the other hand, fluctuations in the price of new energy vehicles cause consumers to delay buying, which has a certain impact on the short-term sales of some car companies. In addition, the new energy vehicle market competition is fierce, Tesla, Inc., BYD, GAC Ean and other car companies contributed the main increment of the industry, different brands of new energy vehicle terminal sales gap is large, the above sales leading car companies are not company customers at present.

③ customer credit risk: although the company's existing customers are mainly vehicle manufacturers and some special-purpose vehicle manufacturers, cooperate with the company for a long time, good reputation, strong financial strength, strong recyclability of accounts receivable, but still do not rule out the risk that individual customers have operational difficulties, resulting in accounts receivable can not be collected in time.

The risk of the loss of core technical personnel in ④: as a high-tech enterprise, the company has a large demand for high-end technical talents, and the loss of core talents will adversely affect the future development of the company.