Incident Overview. The company disclosed an advance increase in 2023 results: The company expects to achieve operating income of 2.3 billion yuan for the full year of 2023, +30.0% year over year; expected to achieve net profit of 160 million yuan, +83.6% year over year; and expected to achieve net profit without return to mother of 160 million yuan, +144.1% year over year.
2023Q4's net profit in a single quarter grew at a record high year-on-month rate. Looking at a single quarter, the company expects to achieve operating income of 710 million yuan in 2023Q4, +24.5% year over month; expected to achieve net profit of 53 million yuan, +82.8% year on year, and +47.2% month on month; expected net profit without return to mother of 52 million yuan, +134.1% year on month, and +51.5% month on month.
The good scale effect of the overall development of the main business helped the profit level to recover. According to the company's disclosure, in 2023, the company will continue to strengthen the control of costs and expenses, strengthen automation upgrades and improve labor productivity for all employees, and drive the company's profitability. The company has continuously carried out measures such as technological innovation, new product layout, and new material application to enhance the competitive advantage of the product; through continuous optimization of key process technology and automated and intelligent manufacturing process management, the scale effect gradually became apparent, and the gross margin of the product was significantly improved in 2023.
Industry expansion+market share increase consolidates speaker infrastructure business. As the core carrier of human-vehicle interaction (the other is vision), automotive acoustics continues to benefit from the trend of electric intelligence+ consumption upgrades. At the industry level, under the trend of electric intelligence+consumption upgrade, car speakers have seen a sharp rise in volume and price (increase in number of bicycles equipped with upgraded speaker technology) and space expansion; at the company level, the independent leading position is stable. The competitors are mainly overseas companies, which further explore the European and American markets based on technology and global delivery advantages. The company's global market share in 2019-2022 is 12.1%, 12.6%, 12.9%, and 13.0%, respectively. The medium- to long-term global market share is expected to increase to 18-20%, continuing to strengthen the speaker base.
From single speaker products to complete acoustic solutions, there is room for growth. Horizontal expansion of the business, from single products to complete automotive acoustic solutions (speaker+independent amplifier+AVAS). 1) From a technical perspective, independent amplifiers (500-1000 yuan for bicycles) have penetrated into mid-range and low-end models, and the new energy vehicle AVAS (40-100 yuan for bicycles) policy is mandatory standard, driving bike support value to more than double that of a single speaker; 2) At the customer level, the entire vehicle audio system has been targeted by multiple customers such as NIO, Ideal, Huawei, and Jinkang. Starting with the 2022Q2, it is expected that it will gradually expand to more customers in the future with the inherent stickiness of speakers and amplifiers.
Investment advice: Under the trend of electric intelligence, vehicle acoustics has become the first choice for adding smart cockpits due to its easy perception and scenario-based essential features. As the leading autonomous vehicle speaker, the company continues to benefit from the electric intelligence trend and changes in the procurement system. We expect the company's revenue in 2023-2025 to be $23.0/3.48/4.31 billion yuan, net profit to mother of $1.60/2.58/ $347 million, and EPS of $1.00/1.61/2.17 yuan. Corresponding to the closing price of 34.60 yuan/share on January 17, 2024, PE was 35/21/16 times, respectively, maintaining the “recommended” rating.
Risk warning: The boom in the automotive industry falls short of expectations; the expansion of automotive electronics customers falls short of expectations; fluctuating raw material prices; fluctuating shipping prices, etc.