Profitability is predicted to increase by 102.91%-170.55% year-on-year
The company announced its 2023 performance forecast: net profit to mother of 0.90-120 million yuan, +102.91%-+170.55%; deducted non-net profit of 0.72 to 102 million yuan, +131.56%-+228.05% year-on-year. Among them, net profit for 4Q23 was 0.24-0.54 billion yuan, a year-on-year change of -4.0%-+118.2%, a month-on-month change of -22.8% -75.4%; deducted non-net profit of 0.20-50 billion yuan, a year-on-year change of -6.9% -129.9%, and a month-on-month change of -29.8% -+73.3%. The company's 2023 earnings forecast is in line with expectations.
Key points of interest
We expect a significant month-on-month increase in revenue and a month-on-month recovery in gross margin for 4Q23. The fourth quarter is the traditional peak season for the charging industry. We expect the company's charging module business to increase significantly month-on-month, while the profit side may benefit from cost reduction and efficiency gains to remain stable month-on-month; prices have stabilized since the special business 2H23, and we expect gross margin to improve month-on-month or may drive the company's gross margin increase; the smart grid business is expected to grow steadily in revenue and maintain a gross profit margin of around 40% on the profit side.
Looking ahead, we expect the company's overall performance to maintain a high growth rate in 2024, by business segment:
Charging module business: 1) Domestic market: At the industry level, benefiting from CNPC, Sinopec tenders and the accelerated layout of car companies, we believe that the charging industry is expected to maintain a high level of prosperity in 2024; at the company level, the company has already entered the support of major customers such as Star Charging and CNPC in 23. We estimate that the company's market share will be around 12-13% in 2024. It is expected that in 2024, the company will continue to expand its market share and drive revenue growth with cost advantages; 2) Overseas markets: mainly benefiting from policy incentives in Europe, America and other places. The company has now entered Siemens global supply Chain and 24-year order volume support increased profitability.
Smart grid business: We expect steady growth in traditional power operation power supplies. The additional power grid automation sector is expected to double revenue in 24 years, supporting revenue growth of about 15% in the smart grid business. On the profit side, we expect to maintain year-on-year stability.
Aerospace special business: Since 2H23, industry prices have gradually stabilized. We expect the company's new projects to gradually expand and drive revenue growth in 2024, while gross margin is expected to rise back to the 45-50% range, driving the company's overall profitability.
Profit forecasting and valuation
The 2023-2025 net profit forecast of 1.07/1.65/239 million yuan remained unchanged, and the target price of 26.05 yuan remained unchanged. The current stock price/target price corresponds to 20.5x/14.2x P/E and 27.4x/18.9x P/E in 2024/2025, respectively, with 33.7% upward room, maintaining the outperforming industry rating.
risks
The progress of going overseas fell short of expectations, and untimely payment of some business payments affected cash flow and the risk of impairment of goodwill.