The company released its 2023 performance report: annual net profit +22.93% The company released the 2023 performance report. In 2023, it achieved revenue of 20.072 billion yuan, YoY +26.73%; realized net profit to mother of 3.341 billion yuan, YoY +22.93%; realized deduction of non-net profit of 3.239 billion yuan, YoY +23.51%. The company's performance was in line with our expectations.
Key points of interest
Annual results maintained steady growth, showing leading resilience in the context of industry adjustments. The company predicts that both revenue and net profit will achieve a year-on-year increase of more than 20% in 2023. We believe that in the context of special industry adjustments throughout the year, the company's performance will continue to grow rapidly, or will mainly benefit from: 1) the continued consolidation of the leading position of connectivity in special fields; 2) the rapid growth in data centers, new energy vehicles, photovoltaic energy storage and other fields. According to the performance report, the company's revenue for the 4Q23 single quarter was 4.713 billion yuan, YoY +39.3%, and net profit was 447 million yuan, +3.6% year-on-year. 4Q23 revenue continued to grow at a high rate, and the profit side growth rate declined. We believe this may be due to annual cost settlement growth and product restructuring in some fields.
The estimated amount of related transactions remains high, and the diversified layout promotes high-quality development. 1) The company announced in December 2023 that it is expected to sell 4.33 billion yuan of products to subsidiaries of the Aviation Industry Group in 2024. We believe that the estimated amount of company-related transactions remains at a high level, reflecting full production tasks in the aviation sector; 2) Within 2023, the company will actively expand its industrial layout, continue to increase the coverage of mainstream new energy vehicle companies, and continue to strengthen business cultivation in the fields of photovoltaic energy storage, data centers, etc. We believe that the company is expected to use its technical and channel advantages in the field of special connectors to accelerate business growth in emerging fields and help the company develop with high quality in the long term.
Increase industrial capacity building and strengthen the leading position in connectivity solutions. The company has laid out a number of industrial capacity building projects in 2023. Among them, the South China Industrial Base (Phase 1) has been officially put into operation, and the Luoyang Infrastructure Industrial Park project is expected to be put into operation in early 2024; the subsidiary Shenyang Xinghua has launched a construction project to increase the production capacity of aero engine wiring and small fans, and China Aviation Fujitec is rapidly advancing; the high-end interconnected technology industry community project obtained the right to use state-owned construction land, and construction officially started on December 15. We believe that the company continues to increase its industrial capacity building, which is expected to further strengthen the company's leading position in connectivity solutions and lay a solid foundation for long-term development.
Profit forecasting and valuation
Considering the pace of release of the company's downstream demand, we lowered the company's 2023/2024 net profit forecast by 3.1%/8.8% to 33.41 billion yuan, and introduced the 2025 revenue/net profit forecast of 293.33/4.80 billion yuan. The company's current stock price corresponds to 2024/2025 16.8/13.8 times the price-earnings ratio. We maintained our outperforming industry rating. Considering the decline in the industry's valuation center, we lowered our target price by 21.3% to 41.21 yuan, corresponding to a price-earnings ratio of 22.2/18.2 times 2024/2025, with a potential increase of 32%.
risks
Market expansion fell short of expectations; market competition intensified.