Introduction to this report:

The company is deeply involved in the precision parts industry, accumulating strong technology to expand the NEV component business, and developing a second growth curve. It has obvious technological and product advantages, and is expected to rapidly increase its market share.

Key points of investment:

Investment advice: The company is a leading commutator company and has opened a second growth curve to expand the NEV component business. The product has remarkable technical advantages and is expected to lead to high performance growth. Maintain the 2023-2025 EPS of 0.27, 0.64, and 0.94 yuan, maintain the target price of 17.06 yuan, and increase holdings.

The performance was in line with expectations. The company announced that it expects to achieve net profit due to mother of 0.66 to 82 million yuan/YoY +165.90%-230.37%; to achieve net profit deducted to mother 0.64 to 79 million yuan/ +921.79%-1161.28% YoY. The main reasons for the expected high increase in the company's performance are: 1) the growth of the new energy market and strong demand for the company's orders; 2) the remarkable results of operational improvements and breakthroughs in intelligent manufacturing technology reform; 3) the transformation of technology accumulation results, which have been targeted for new projects by many leading new energy customers.

The production of new energy vehicles is growing rapidly, and the penetration rate continues to increase, which is beneficial to the company's new product release.

In 2023, China's NEV production reached 9.587 million units/ +35.8%; China's automobile production reached 301.61 million units/ +11.6%. The growth rate of NEV production was much higher than the overall production rate of the automobile market, and the NEV penetration rate increased to 31.8%. With the high growth of new energy vehicles, the company's demand for orders for power batteries and electronic control components for motors is strong, new projects continue to be mass-produced, and sales revenue is growing rapidly.

We have accumulated deep technology and have successively won targeted projects from leading customers in the industry. The company's targeted projects for core customers of NEV components have successively moved into mass production and continued to expand production volume. The company and customers have jointly developed the entire process and are deeply integrated. New energy vehicle components have been designated for dozens of projects and more than 100 products from more than a dozen world-famous customers, including Daimler Benz, ZF, and Bosch in Germany. The products support famous automobile brands such as Mercedes-Benz, BMW, Volkswagen, Toyota, and Guangzhou Automobile.

Risk warning: The penetration rate of new energy vehicles falls short of expectations, and product expansion falls short of expectations.