Key points of investment:
The 23-year results were in line with expectations, and overall performance remained steady. The company previously announced a pre-increase in 2023 performance. It is estimated that the company will achieve net profit of 382 million yuan to 408 million yuan in 2023, an increase of 45%-55% over the previous year; net profit after deduction of 343 million yuan to 370 million yuan, an increase of 63.66%-76.21% over the previous year. The company's performance is in line with our previous expectations. The revenue side of the company's three main businesses, compressor parts, construction machinery parts, and auto parts, performed steadily in 2023. The sharp increase in performance is expected to be mainly due to factors such as continuous optimization of product structure and production efficiency driving an accelerated increase in profitability.
The downstream prosperity of Baidian remains the same, and construction machinery and auto parts customers continue to develop. In terms of compressor parts, according to industry online data, household air conditioners achieved production/sales volume of 17.41/16.32 million units respectively in January 2024, up 63.7%/55.8% year on year, of which domestic sales achieved 7.32 million units, +62.6% year over year, export 8.99 million units, and +50.6% year over year. To a certain extent, there are factors leading to the production pace caused by the Spring Festival stalled period, but in terms of production schedule data, the current production schedule for household air conditioners in March is 22.13 million units, an increase of 25.2% over the same period last year. 12.30/9.83 million units, with performance growth of 17.3%/23.5% in the same period last year. Production schedules within April/export sales are expected to be +21.4%/+18.6% respectively. The introduction of policies such as the traditional peak stocking season + “trade-in”, compounded by overseas stock replenishment demand, the home economy is still high. As a white electric compressor parts manufacturer, the company's 24Q1 business is expected to be saturated with orders, and the capacity utilization rate remains at a high level. In terms of the auto parts business, according to data from the China Association of Automobile Manufacturers, passenger car production/sales volume completed 3.36 million units/3.451 million units respectively, up 7.9%/+10.6% year on year. The downstream production and sales situation is good. The company's 23H2 auto parts orders are saturated. It is expected that the business scale will increase in 24 with the implementation of new production capacity. In terms of construction machinery, while consolidating the original European and American customers, the company continued to develop a number of Japanese and Korean customers, and production improved quarterly.
Maintain a “buy” investment rating. We maintain our previous profit forecast for the company. We expect the company to achieve net profit of 4.04/5.01/603 billion yuan in 2023-2025, respectively, +53.2%/+24.1%/20.4% year-on-year, corresponding to the current price-earnings ratio of 13/10/9 times, respectively. According to the current outlook, the production schedule for downstream household air conditioners will remain high in March, and the company is expected to continue to benefit as an upstream supplier; with the release of production capacity, the company's white electric compressors, construction machinery, and auto parts businesses are expected to expand steadily, maintaining a “buy” investment rating.
Risk warning: raw material price fluctuations; risk of exchange rate fluctuations; impact of downstream business sentiment fluctuations.