The company's 3Q23 performance meets our expectations.
The company announced 3Q23 results: 3Q23 income 264 million yuan, year-on-year + 30.72%, month-on-month + 23.01%; return to the mother net profit of 59 million yuan, year-on-year + 43.07%, month-on-month + 16.08%. The income of 1-3Q23 was 662 million yuan, + 26.34% compared with the same period last year, and the net profit was 150 million yuan, + 39.33% compared with the same period last year. The company's performance is in line with our expectations.
Trend of development
Tamping automotive micro-motor and cleaning system two major business, the performance continues to grow at a high speed. The company focuses on micro motors and cleaning systems, and is deeply bound with well-known domestic and foreign mainframe factories and Tier 1 manufacturers, with high quality customer resources; the company adheres to the production strategy of platform + automation and self-made core components, and its profitability is significantly ahead of the industry. 3Q23's single-quarter gross profit margin / net profit margin reached 37.3% / 22.2% respectively. We believe that the company's high-quality customer resources and outstanding cost control capabilities are expected to provide a solid foundation for the continuous expansion of the company's business.
The core enterprise of automobile micro-motor, automobile electric intelligence brings the rise of quantity and price. The company's motor business mainly includes individual products such as trunk, side doors and ABS motors, as well as module products such as invisible door handles and charging doors. With the improvement of the permeability of electric components such as "four doors and two covers" of cars, the design of seats, display screens and other components is more intelligent, and new systems such as wire control technology are gradually applied, and consumers' demand for motor static and intelligent control increases synchronously. The market for automotive micromotors is on the rise in volume and price. As the core enterprise in the field of micro-motor, the company has supported a number of international leading mainframe factories and Tier 1 manufacturers, and developed from single motor to system assembly. We believe that the micro-motor business has become the core of the company's strategy, with the extension of single products to platform products, as well as the strong expansion of multi-category products and multi-customer base, the company's micro-motor business will enter a period of rapid growth.
Layout of ADAS sensor cleaning system, overseas base construction contributes to future increments. Relying on the accumulation in the field of vehicle cleaning system and micro-motor, the company has expanded horizontally to the field of ADAS sensor cleaning system. We believe that with the improvement of autopilot level and permeability, the ADAS sensor cleaning system may be gradually mass produced from 2023, and the value of the cleaning system per bike is expected to increase from the current 60 yuan to more than 1000 yuan. We believe that the company has a rich product matrix of cleaning systems, providing customers with one-stop solutions. With the gradual penetration of ADAS cleaning system and the production capacity climbing of overseas bases such as Southeast Asia and North America, the cleaning system business is expected to gain a long-term driving force.
Profit forecast and valuation
We keep our profit forecasts for 2023 and 2024 unchanged, with net profits of 210pm and 279 million respectively.
The current share price corresponds to a price-to-earnings ratio of 27.2 times 2024 / 20.5 times earnings for 2023 Universe. Maintain an outperform industry rating and a target price of 86.00 yuan, corresponding to 32.7 times of 2023max 2024 / 24.7 times of Pamp E, which has 20.1% upside compared to the current stock price.
Risk
Raw material price fluctuations, new business development is not in line with expectations, relatively concentrated customers, and so on.