The business covers four major fields. The “one-stop” precision structural parts supplier company's business covers the four major fields of photovoltaics, security, consumer electronics, and automobiles, and is a “one-stop” supplier of precision structural parts. The photovoltaic, energy storage, and new energy vehicle business continued to grow in 2023. Total 2023Q1-Q3 revenue reached 3.141 billion, up 50.98% year on year; realized net profit of 292 million yuan, up 32.45% year on year; gross margin was 19.94%, down 0.69 pct year on year; net profit margin was 9.28%, down 1.30 pct year on year.
The main business is diversified downstream, binding leading customers in various fields
Photovoltaics: As the company's main business, customers include industry-leading companies such as SolarEdge, Enphase, and Solar Power. The PV business had revenue of 1.77 billion yuan in '22, accounting for 54.9% of revenue and a gross profit margin of 21.7%. The company expects the PV business to increase 30% year-on-year in '24.
Automobile: Customers include well-known manufacturers such as BYD, BAIC New Energy, and Ningde Times. Revenue in '22 was $800 million, accounting for 24.7% of revenue. The NEV-related business grew rapidly in the first three quarters of '23, with a year-on-year increase of more than 80%. Sales volume in Q1-Q3 in '23 was close to the full year of '22.
Security: Customers include well-known domestic and foreign companies such as Hikvision, Huawei, Axis, Bosch, etc., with 22-year revenue of 365 million, accounting for 11.32% of revenue. The security business declined year-on-year in Q1-Q3 in '23.
Consumer electronics: Customers include PMI, NEC, Honeywell, Scud Group, etc., with 22-year revenue of 234 million, accounting for 7.28% of revenue. The consumer electronics business declined year over year in Q1-Q3 '23.
Investing in the construction of an aluminum extrusion production base in Mexico and actively expanding overseas markets, the company announced on December 18, 2023. The company will set up a subsidiary in Mexico with a registered capital of 1 million pesos, and invest in the construction of an aluminum alloy extrusion production base project in Mexico. It plans to purchase a land area of about 200 acres, with a total construction area of about 100,000 square meters to produce aluminum extruded profiles, die-casting and plastic structural parts products in the photovoltaic, energy storage and new energy vehicle industries, and carry out processing business for profiles and die-cast structural parts. We expect that the completion of the Mexican plant will help the company expand overseas customers, reduce overall production costs, and enhance the company's competitiveness in overseas markets.
Profit forecast: Considering that the main photovoltaic industry is affected by factors such as inventory removal from major downstream customers, fierce market competition, and high base, growth has slowed; the consumer electronics and security sector businesses have also declined due to downstream demand. We adjusted the company's revenue forecast for 23-24 from 77.3/113.6 to $44.8/6.20 billion yuan, and adjusted the company's net profit forecast for 23-24 from 8.2/13.6 to 42/577 million yuan. The estimated net profit for 25-year was 750 million yuan. The net profit for 23-25 corresponds to the current PE of 16/12/9X, and downgraded to the “increase” rating.
Risk warning: raw material price fluctuations, downstream industry fluctuations, increased market competition, sales of new energy vehicles falling short of expectations, etc.