Incident: The company released its 2023 annual report. In 2023, the company achieved revenue of 1.74 billion yuan, +37.8% year-on-year, realized net profit of 260 million yuan, +43.9% year-on-year, and realized net profit of 290 million yuan without return to mother, +130.4% year-on-year. The company announced a profit distribution plan for 2023. It is estimated that a cash dividend of RMB 5 (tax included) will be distributed to all shareholders for every 10 shares, for a total of RMB 216 million (tax included). The cash dividend ratio accounts for 82.95% of the net profit for the year.
Comment:
Profitability increased significantly, and incentive targets were exceeded. The company achieved revenue of 1.74 billion yuan in 2023, +37.8% year over year; realized net profit of 261 million yuan, +43.9% year on year; realized net profit without deduction of 290 million yuan, +130.4% year on year. The 23Q4 company achieved revenue of 526 million yuan, +29.1% year on year; realized net profit of 55 million yuan, -29.58% year on year; gross margin was 28.30%, +10.84 pct year on year, +1.00 pct month on month. Net profit margin was 10.47%, -8.72pct yoy, and -5.49pct month-on-month. The company announced an employee stock ownership plan in 2023. The company's revenue/profit target growth rate for 23 years was 20%/40%, and the company exceeded the incentive target in 2023.
The customer structure was further optimized. Currently, the main customers include high-quality vehicles and power platforms in the industry such as Changan Ford, Ideal Xinchen, China FAW, and Jiangling Ford. In 2023, the company received a number of projects including export orders for some transmission cases and cylinder heads from Changan Ford (exported to Ford in North America through Changan Ford). The ideal automobile cylinder block cylinder head tasks were delivered in a high quality and quantity, and also obtained quotation requests from some pure electric and hybrid customers in the new energy sector.
The expansion results in the field of new energy hybrids are particularly remarkable. By business, mature businesses such as cylinder heads, cylinder blocks, and crankshafts have gained further market share, and the product structure of Qin An Co., Ltd. is being continuously optimized. In 2023, the cylinder head business revenue was 805 million yuan, and the NEV market share was 15.52%, +11.11pct year on year; cylinder block business revenue was 495 million yuan, and the NEV market share was 11.34%, and the share was +10.74pct year over year. The market share of crankshafts and others achieved a “from scratch” breakthrough: crankshaft business revenue of 163 million yuan, NEV market share 3.93%; other business revenue of 249 million yuan, NEV market share 1.04%.
We have sufficient cash on hand, and have continued to give back to investors with high dividends since listing. As of the end of 2023, the balance of the company's monetary capital and transactional financial assets was 1.52 billion yuan, the cash ratio was 2.12, and the balance ratio was 18.02%. It has strong solvency and resilience to risks. The proposed dividend for 2023 is 216 million yuan (tax included), and the cash dividend ratio accounts for 82.95% of the year's net profit. The dividend amounts for 2021 and 2022 were RMB 207 million and RMB 422 million respectively. Since listing, the cumulative cash dividend was RMB 938 million and share repurchases amounted to RMB 252 million. The total amount accounted for 107.07% of net profit returned to mother since listing.
Profit forecast: The company's customer structure is expected to continue to be optimized. The expansion results in the new energy hybrid field are remarkable. Sufficient cash on hand and continued high dividends since listing have created a high margin of safety. We expect the company's 2024-2026 net profit to be 350 million yuan, 4.4 million yuan, and 530 million yuan, corresponding PE 13, 11, and 9 times, respectively.
Risk factors: Risk of sales of extended-range models falling short of expectations, risk of new business development falling short of expectations, risk of fluctuating raw material prices and supply shortages.