Event: The company released its 2023 three-quarter report. Q3 achieved revenue of 1,012 billion yuan, +0.18% year-on-year, net profit of 139 million yuan, +6.33% year-on-year; gross profit margin of 23.69%, net profit margin of 13.71%.
Core customer performance is strong, and revenue is growing steadily. The company's strength has been endorsed by SAIC Motor, and has successively expanded new energy customers such as Tesla and Ideal. Since 2022, the company's new energy customers have contributed nearly 60% of revenue. In the first three quarters of 2023, the company's core customer Tesla and Ideal had strong sales performance, with a difference of +45.7%/181.0%, respectively, driving the company's revenue to +14.8% year on year. In the Q3 quarter, Tesla's (domestic) /ideal/SAIC sales were -10.0%/+21.5%/+10.7% month-on-month, respectively. The company achieved revenue of 1.01 billion yuan, +11.5% over the previous quarter, an increase in line with expectations. Looking ahead to the fourth quarter, as customers deliver new cars and modifications one after another, the implementation of mass production of ongoing projects is expected to drive a further increase in revenue scale.
New projects drive R&D investment, and quarterly earnings fluctuate. Steel and aluminum account for more than 50% of the company's raw material costs. As commodity prices decline, procurement costs are optimized; the commencement of the IPO project has led to an increase in capacity utilization. The company has continuously optimized processes and increased automation rates, and achieved remarkable results in cost reduction and efficiency.
2023Q1-3, the company's gross margin was 24.34%, +0.99pct year-on-year. Due to the increase in the share of export business with high gross margins and some waste sales in Q2, the gross margin for the single quarter was high. Q3 had a gross profit margin of 23.69% in a single quarter, -2.96 pct over the previous year, returning to normal levels, and still +0.64 pct over the previous year. On the cost side, the Q3 cost rate was +0.2 pct month-on-month and +1.3 pct year-on-year, mainly due to the increase in R&D expenses brought about by new project undertakings. Excluding R&D expenses, the total Q3 fees were -0.3/-0.1 pct month-on-month, respectively. Among them, exchange earnings contributed positively, sales expenses were stable, and management expenses were -0.7 pct month-on-month. Affected by gross margin, Q3 net profit margin was -1.84pct month-on-month and +0.76pct year-on-year.
The volume and price of the stamping business have risen sharply, and the progress of integrated die casting has been impressive. New power car companies have little experience in building cars. Some have chosen the OEM model and have moved from contract to assembly. There is a trend of concentration in the industry pattern. The company has more than 3,000 kinds of stamping parts in total. The products have been approved by joint ventures, and the molds are developed and produced in-house. It has assembly support capabilities. It has received assembly orders from Ideal, NIO, etc., one after another, and has received assembly orders such as Ideal and NIO, and the bicycle ASP continues to improve. Since 2020, the company has introduced high-tonnage equipment and integrated die-casting with a forward-looking layout. The Yancheng Duoli 6,100 ton project has already achieved mass production and sales, and the remaining three production lines are in the installation stage. In September 2023, the company once again won integrated die-casting orders from leading car companies. It is expected to contribute more than 2 billion dollars in revenue during the life cycle, and its capabilities continue to be recognized.
In order to further strengthen its layout in the lightweight sector, the company plans to invest 3 billion yuan to build new production capacity in Jintan, Jiangsu. According to the plan, it is estimated to contribute 1.7 billion yuan after delivery. Customer targeting and capacity expansion are progressing in an orderly manner, and future growth can be expected.
Profit forecast: It is estimated that in 2023-2025, the company's net profit will be 5.3, 6.3 billion yuan, and 760 million yuan respectively, and the corresponding PE ratio will be 18, 15, and 12 times, maintaining the “buy” rating.
Risk warning: raw material prices fluctuate; new customer expansion falls short of expectations; integrated die-casting business progress falls short of expectations, etc.