Revenue performance was stable, and fourth quarter results were under pressure. In 2023, the company achieved revenue of 4.70 billion/+0.9%, net profit attributable to mother of 380 million/ +10.3%, and net profit of 30 million/ -2.8% after deducting non-return to mother. Among them, Q4 revenue was 1.05 billion/ -1.5%, net profit attributable to mother was 100 million/ -18.8%, and net profit not attributable to mother was 50 million/ -13.7%. The company plans to pay a cash dividend of 3.33 yuan (tax included) for every 10 shares, with a cash dividend payment rate of 42.3%. Against the backdrop of pressure on the lighting industry, the company's general lighting performance is steady, vehicle lighting is developing rapidly, and revenue has achieved steady growth; the company has planned asset impairment preparations totaling 88 million yuan, which has dragged down profits.
The lighting business performed better than the industry, and the decline narrowed in the second half of the year. Affected by overseas demand, the export performance of China's lighting industry was weak in 2023. According to data from the General Administration of Customs, the export value of China's lighting industry reached 42.2 billion US dollars in 2023, down 4.6% year on year, of which Q4 fell 6.5% year on year. The company continued to strengthen cooperation with customers. The lighting business declined 2.8% year on year to 4.04 billion in 2023, of which H1/H2 was -6.1%/-0.9% respectively, and the revenue decline narrowed markedly in the second half of the year. Looking at domestic and foreign sales, the company's lighting business export revenue fell 1.4% year on year to 3.75 billion, and the export sales performance was better than that of the industry.
The automotive business grew rapidly, and profits increased markedly. The company continues to develop automotive customers and has established good cooperative relationships with well-known parts companies such as Panasonic, Huayu Vision, Marelli, and Hella. In 2023, the company's automotive business revenue was 620 million yuan, up 43.7% year on year, with H1/H2 +99.3%/+8.7% respectively.
By category, Debon's automotive lighting revenue, which is mainly based on in-vehicle controllers, increased 78.1% to 380 million, and revenue from automotive lighting structural components increased by 41.4% to 320 million. With the increase in scale, the profitability of the company's automotive business increased significantly. In 2023, it achieved net profit of 40 million yuan, an increase of 93.4% over the previous year, and the net interest rate reached 6.4%; among them, the net interest rate for vehicle controllers was 7.0% /+0.7pct, and the net interest rate for automotive lighting structural parts was 4.1% /+1.0pct.
Gross margin continued to rise, and operating profit margins remained stable in Q4. The company's gross margin in 2023 was +2.6 pct year over year to 19.4%, of which Q4 was +2.3 pct year over year to 23.6%. The gross margin of the company's various businesses increased. The gross margin of general lighting was +2.6 pct to 19.2%, and the gross margin of automotive lighting was +1.6 pct to 19.3%. The company's management/R&D/sales expense ratios were +1.5/+0.4/+0.4pct to 6.6%/5.0%/3.0%, respectively; the financial expense ratio declined due to exchange gains and losses, from -3.2pct to -1.6% year on year; the total cost ratio for the Q4 period was -0.9 pct year over year. Affected by the high profit and loss of fair value changes during the same period, the company's Q4 fair value change profit and loss decreased by 40 million yuan year on year, compounded by asset impairment charges, resulting in Q4 net interest rate -2.0pct to 9.3% year over year. If only changes in gross margin and operating expenses are taken into account, the company's Q4 operating profit margin is basically stable.
Risk warning: industry competition intensifies; automotive customer expansion falls short of expectations; industry demand recovery falls short of expectations.
Investment advice: Adjust profit forecasts and maintain an “gain” rating.
Taking into account the slight increase in the company's R&D expenses and weak demand in the domestic lighting market, the profit forecast is adjusted. The company's net profit for 2024-2026 is estimated to be 4.3/4.9/550 million (previous value was 4.5/5.2 billion), with a growth rate of +15%/+14%/+12%, corresponding to PE = 13/11/10x, maintaining the “gain” rating.