Incident: The company recently released its 2023 annual performance forecast. In 2023, it achieved net profit of 1.8-1.28 billion yuan, an increase of 20% ~ 42%; deducted non-net profit of 10.5-1.25 billion yuan, of which Q4 net profit was 285-485 million yuan, -7 ~ +58% year over year, -0.4% ~ +70% month-on-month; after deducting non-net profit of 2.79 to 479 million yuan, the same increase of 1% to 74% month-on-month, +1% to 74% month-on-month, surpassed market expectations.
Net profit greatly exceeded expectations, and profit levels were strong. We expect the company's revenue for the full year of 2023 to be around 10.6 billion yuan, with a net interest rate of about 11%, +1pct year; Q4 revenue for 2023 will be 2.8 billion yuan, with a net interest rate of about 14%, +2pct year on year, and +4pct month-on-month. We believe that the main reason for the increase in the company's net interest rate is: 1) Q4 was affected by factors such as VAT refunds and depreciation; 2) the company absorbed the impact of the price reduction through cost reduction. We believe that the competitive pattern in the structural parts sector is good, the company's production capacity expansion is in line with changing trends in industry demand, and future profitability is expected to remain strong.
The overseas production capacity construction industry is leading, and overseas sales are expected to drive a further increase in market share and profitability. In terms of production capacity, the company has planned a total of 3 bases in Europe. Among them, the Hungarian base has entered the mass production stage and has begun profit, the German base is expected to begin production in 2024, and the Swedish base is in the trial production stage. The company is leading the overseas production capacity construction industry, and we expect the European market to expand on a large scale in 2025. In the future, with the gradual release of the company's overseas production capacity and delivery of orders, the market share and profitability are expected to increase further.
Investment advice: Considering the slowdown in the industry's growth rate and the large uncertainty facing overseas markets, we lowered our profit forecast. The company's revenue for 2023/2024/2025 is 106/127/171 billion yuan, up 22%/20%/35% year on year; net profit to mother is 12/14/1.6 billion yuan (originally estimated at 14/20/2.7 billion yuan), respectively, up 33%/18%/15% year on year. The corresponding EPS is 4/5/6 yuan respectively. The current stock price corresponds to PE 15/13/11. Maintain a “buy” rating.
Risk warning: industry competition intensifies, downstream demand falls short of expectations