Incidents. The company announced its 2023 performance forecast on January 16. It is expected to achieve net profit attributable to shareholders of listed companies of 398 million yuan to 420 million yuan for the full year of 23, an increase of 55.12% to 63.69% over the previous year, including net profit of 388 million yuan to 400 million yuan after deducting non-recurring profit and loss, an increase of 58.15% to 67.36% over the same period last year. The reason for the increase in performance is mainly due to strong demand from downstream customers. New projects targeted by the company in the early stages have entered the mass production stage, sales revenue has increased year-on-year, capacity utilization has increased, economies of scale have increased, and various products and businesses have been steadily improving. At the same time, the company has improved internal management efficiency, actively optimized production processes and technology, and continued to effectively promote cost reduction measures.
Early targeted projects are gradually mass-produced, and new customers are actively developed. The company deeply cooperated with GAC Aian, BYD, NIO, Xiaopeng and other car companies, and also signed strategic cooperation agreements with Ningde to guarantee market share in the battery case business.
In December '23, the company received fixed notices for new energy vehicle projects from two famous joint venture car brand customers, confirming that the company would provide products such as subframes, B-pillars, side panels, and aluminum anti-collision beams for the two new energy vehicles.
According to customer forecasts, the mass production period for the targeted projects obtained this time is February 2025 and March 2025, respectively, with a life cycle of 3-4 years. The total estimated project sales are about RMB 7-800 million.
The number of market orders is sufficient, and the number of new fixed points added in the three quarters of '23 has exceeded 33 billion yuan. Project targeting intentions are sufficient. From January to April 2023, the company expects the total amount of newly designated projects to be 149-151 billion yuan, and the project period is 1-7 years; in May-June, the company expects the total amount of newly targeted projects to be 131-13.4 billion yuan, of which projects with a project cycle of 1-8 years are expected to be 109-111 billion yuan, and projects with a project cycle of 10-12 years are expected to be 2.23 billion yuan. From October to December '23, the total amount of newly designated projects of the company was 4.9-50 billion yuan, of which projects with a project cycle of 1 to 5 years are expected to be 4.5 billion yuan, and projects with a project cycle of 6 to 10 years are estimated to be 400 million yuan.
The optical storage business continues to be implemented to ensure the steady growth of the company's performance. The company actively lays out optical storage inverters. It has supplied photovoltaic inverters, energy storage and other related products to well-known domestic and foreign companies such as Huawei, Xinnengan, Enphase Energy, and Larsen, with great potential for incremental support. In August '23, the company received a winning bid from a leading customer for photovoltaic inverters and energy storage, confirming that the company is the supplier for energy storage structural parts, industrial and commercial inverter assembly and structural parts projects. The total project is estimated to be RMB 9-10 billion, and the project period is 2-4 years, which will bring the company 225 million yuan to 500 million yuan in revenue every year from now on. In December '23, leading digital energy customers were notified of winning the bid. The period is 1-2 years, and the total sales of the project are estimated to be about RMB 3-4 billion.
Investment advice: We expect the company to achieve revenue of 56.10/74.36/9.687 billion yuan in 2023-2025, and achieve net profit of 4.11/6.02/827 million yuan. The stock price on January 17, 2024 corresponds to a 24-25 price-earnings ratio of 11 and 8 times, respectively. Considering that the company is deeply involved in molds and metal structural parts, focusing on new energy tracks, including NEV structural parts, power battery cases, and optical storage equipment, etc., future demand will continue to be released, there is plenty of room for growth, and it maintains a “recommended” rating.
Risk warning: macroeconomic and market demand falls short of expectations; capacity expansion falls short of expectations; risk of fluctuations in raw material prices.