Event: Recently, the 2023 China Automobile Supply Chain Conference was held in Wuhan, and Huagong Gaoli's new energy vehicle PTC heater was successfully selected as an excellent automobile supply chain. The PTC heater independently developed by Huagong Gaoli is the first in China and has broken through the bottleneck of ultra-high pressure platforms. At the same time, it has developed an intelligent communication vehicle heater with CAN/LIN communication mode. The technology has reached the international advanced level, enabling domestic replacement of basic components for smart cars. The company is expected to continue to develop innovative fields such as new energy vehicles.
Performance has maintained a high growth rate, leading market share, and helped the industry continue to upgrade in the digital and energy era. In terms of profitability, in 2023Q1-Q3, the company achieved revenue of 7.208 billion yuan (down 18.56% year on year), net profit of 812 million yuan (+12.40% year-on-year), net profit after deduction of net profit of 749 million yuan (+11.06% year on year), and comprehensive gross margin of 23.88% (up 5.21pct year on year). The year-on-year decline in revenue was mainly affected by delays in operator construction cycles. Looking at the 2023Q3 single quarter, revenue was 2.184 billion yuan (down 17.06% year on year), net profit was 230 million yuan (+44.74% year on year), net profit after deduction reached 204 million yuan (+41.0% year on year), and performance maintained marginal positive growth. The company's various businesses maintain high gross profit, and overall, it is expected that it will continue to maintain a high growth trend.
The product line is continuously enriched, and overseas markets are actively deployed to help marginal performance improve, which can be expected. Judging from the product structure, as of the first three quarters of 23 years, the intelligent manufacturing business achieved revenue of 2,258 million yuan and net profit of 264 million yuan/ +46%. The company is deeply involved in leading customers in the industry and setting standards. It has developed a series of new products for automotive electronics, medical devices and other industries, such as medium power intelligent welding equipment, automatic production lines for bipolar plate welding, and semiconductor wafer cutting equipment, etc., to solve some of the technical problems that are stuck in the neck. The laser cutting series product, 3D five-axis laser cutting intelligent equipment, has received batch orders from leading new energy car companies, and its market share has steadily ranked among the highest in China. In terms of connectivity business, the revenue from the optical connectivity business was 1,909 million yuan, which was basically the same, with net profit of 94.2 million yuan/ +8.2%. In the context of accelerated improvement of computing power, the company has vigorously promoted data center business, successfully placed in the leading Internet vendor resource pool, and delivered a full range of optical modules of 400G and below in batches; 800G series products have been sampled by top Internet manufacturers; and has actively promoted the application of silicon optical technology, and now has full self-development and design capabilities from silicon optical chips to silicon optical modules. In terms of sensing business, sensor business revenue reached 2.27 billion yuan/ +45%, and net profit reached 346 million yuan/ +65%. The company maintained its leading position in smart home sensors and PTC heaters for new energy vehicles. Currently, PTC heaters for new energy vehicles occupy 60% of the domestic market share. NTC's traditional business revenue was 860 million yuan/ +23%; new energy vehicle sensor business revenue was 1,358 billion yuan, up 67% year on year. Overall, the company's product line continues to be enriched and profitability continues to expand.
Increase R&D costs, optimize product structure upgrades, accelerate development of key products, and enhance innovation competitiveness. In the first three quarters, the company's R&D investment reached 486 million yuan (+31.37% year-on-year), and the R&D expenditure rate was 6.74%, accounting for an increase of 2.56 pct. The product structure was gradually deployed and improved towards high-end products. Overall, on the one hand, as demand for AI applications continues to drive, the company's high-end optical module orders are expected to grow. On the other hand, the NEV industry chain continues to lay out, market share remains leading, and revenue is expected to improve marginally.
Investment suggestions: Based on the latest performance, we gave the company a net profit forecast of 1,041 billion yuan, 1,244 billion yuan, and 1,586 billion yuan for 2023-2025, corresponding to EPS of 1.03 yuan, 1.26 yuan, and 1.58 yuan, and corresponding PE of 28.96 times, 23.84 times, and 19.00 times, maintaining the “recommended” rating.
Risk warning: risk of exchange rate fluctuations; risk of rising raw material prices; risk of fluctuations in customer demand; risk of new product marketing falling short of expectations.