Incident: The company released its 2023 annual performance forecast. The company achieved net profit of 39-450 million yuan, an increase of 90.1%-120.1% year on year; realized deducted non-net profit of 3.6 to 430 million yuan, an increase of 72.3% to 101.1% year on year.

Looking at the single quarter, Q4's net profit to mother was 0.8-140 million yuan, up 81.5%-226.9% year on year, -22.9%-+38.8% month on month; Q4 deducted non-net profit of 0.6-120 million yuan, up 65.5%-233.4% year on year, and -37.9%-25.1% month on month.

Profits have doubled thanks to the recovery of the heavy truck industry. The recovery of the heavy truck industry in 2023 benefited from the recovery in downstream demand, and the large-scale effect supported the company's profit growth. In '23, the company's net profit to mother was 39-450 million yuan, an increase of 90.1% to 120.1% year-on-year. In addition, the company fully enjoyed the export dividends of the heavy truck industry. The export business revenue in the first three quarters reached 610 million yuan, accounting for 20.7% of the company's revenue. The export business has advantages such as short billing periods and low three-package fees. As overseas customer demand increases, the overseas market may contribute an important increase in the company's profits.

Actively promote product development based on electric steering systems. The company and Mando Suzhou jointly invested to establish a joint venture. The company invested 60 million yuan and held 60% of the joint venture's shares. The joint venture will focus on the commercial vehicle steering system field, based on the production, design, development and assembly of electric steering systems, and gradually expand various other auto parts businesses. Currently, samples are being developed with the customer, and related tests are carried out later. Compared with traditional commercial vehicle steering systems, electric steering systems can effectively improve the product configuration environment, reduce fuel consumption, improve steering performance and ensure safety. Furthermore, it can be used for level-3 or higher high-precision autonomous driving through additional functions and cooperative control.

Lay out four development curves to ensure the company's sustainable development. The company actively consolidates its leading edge in the internal combustion engine core components business to ensure steady growth in the first development curve. The company continues to develop air suspension systems and electric steering systems as the second and third development curves, and will increase investment and management efforts in the air suspension business in 24/25, which is expected to contribute an important increase in performance in the future. In addition, the company comprehensively lays out vehicle system components and high-tech projects as the fourth development curve. Weihai Tianrun Intelligent Technology Co., Ltd., a wholly-owned subsidiary of the company, carries out automation equipment and technical service business. The leading products include integrated applications of truss robots, intelligent logistics caching, and intelligent inspection systems. It is committed to providing cost-effective automation equipment, flexible tooling design, automatic inspection technology, equipment automation transformation and integration, and complete line automation design solutions to ensure the company's medium- to long-term sustainable development.

Profit forecasting and investment advice. The company's 2023-2025 EPS is expected to be 0.36 yuan, 0.48 yuan, and 0.65 yuan respectively. The corresponding dynamic PE is 13 times, 10 times, and 7 times, respectively, maintaining a “buy” rating.

Risk warning: market competition risk, raw material price fluctuation risk, risk of downstream customer sales falling short of expectations, risk of policy adjustments, etc.