Event: After the market on January 23, the company released the 2023 annual results forecast.
The 2023 results are in line with expectations. Net profit due to mother is expected to be 22-270 million yuan, a year-on-year increase of 116%-165%. In 2023, the company is expected to achieve net profit of 22-270 million yuan, an increase of 118%-168 million yuan, an increase of 116%-165%; net profit after deducting non-return to mother of 195-245 million yuan, an increase of 23%-54% year on year. In 2023Q4 alone, net profit due to mother is expected to be 41-91 million yuan, which is a year-on-year correction; net profit without return to mother is 3300-83 million yuan, a year-on-year change of -40% to 51%. Achieving rapid growth in performance in 2023 is mainly due to: 1) Accumulation of 108 million impairment provisions in 2022, resulting in a low base. Excluding the effects of impairment, net profit returned to mother increased by about 5%-29% year on year in 2023; 2) the company's product structure continued to be optimized, and the revenue share of high-margin products further increased; 3) raw material prices declined and remained stable; 4) exchange rate changes formed profits; 5) the company's continuous promotion of lean production management reduced production costs.
Under the “roll-over” trend, the NEV and wind power industries continue to open up market space. With their simple structure and high cost performance, self-lubricating bearings are suitable for harsh environments such as humidity, dust, radiation, etc., and are mainly used in construction machinery, automobiles, port machinery, agricultural machinery, etc. With the rapid development of the NEV and wind power industries, the demand for self-lubricating bearings is increasing. 1) New energy vehicles: Self-lubricating bearings have the advantages of weight reduction, low noise, no fuel supply, etc., which meet the lightweight requirements of new energy vehicles. The increase in the penetration rate of new energy vehicles is helping to increase the demand for self-lubricating bearings. We expect sales of new energy vehicles to reach 14.64 million units in 2025, increasing the penetration rate to 50%, and sales CAGR of about 16% in 2023-2025. 2) Wind power industry:
With their advantages of simple structure, strong carrying capacity, and excellent vibration absorption and impact resistance, self-lubricating bearings are suitable for wind power main gearbox operating conditions. At the same time, with their cost performance advantages, they can help wind power continue to reduce costs. We expect China's wind power gearbox bearing market to reach 8.2 billion yuan in 2025, with a CAGR of about 22% in 2022-2025.
Self-lubricating bearings have formed a pattern dominated by overseas professional self-lubricating bearing companies such as GGB in the US, Oiles in Japan, and Stain-Gobain in France. The domestic self-lubricating bearing industry is beginning to take shape. Domestic professional self-lubricating bearing enterprises represented by the company already have a competitive advantage in price and some technical indicators, and have achieved export sales.
Build core competitiveness with multiple advantages, increase wind power bearings and ball screws, open up room for growth, competitive advantages such as R&D, customers, and strong simultaneous development capabilities to cooperate with OEMs, and build core competitiveness for the company. Meanwhile, in 2022, the company will launch fixed growth to help the company's long-term development. It plans to raise no more than 446 million yuan to expand production of self-lubricating bearings and ball screws, and build new production capacity for wind power self-lubricating bearings.
Profit forecasting and valuation
Net profit due to mother in 2023-2025 is expected to be approximately RMB 2.44, 2.94, and 375 million yuan, respectively, up 139%, 20%, and 28% year-on-year, with CAGR = 24%; corresponding to PE 19, 16, and 12 times, maintaining a “buy” rating.
Risk warning:
1) Demand recovery for construction machinery fell short of expectations; 2) automobile production and sales fell short of expectations; 3) raw material prices rose.