Revenue increased 6.5% year over year in '23
Huayu Auto released its annual report. In 23, it achieved revenue of 168.59 billion yuan (yoy +6.5%), net profit to mother of 7.21 billion yuan (yoy +0.15%), and deducted non-net profit of 6.50 billion yuan (yoy +0.6%). Among them, Q4 achieved revenue of 47.035 billion yuan (yoy +4.6%, qoq +5.5%) and net profit to mother of 2,474 billion yuan (yoy +6.4%, qoq +30.2%). Considering the ongoing pressure from joint venture customers, we expect the company's net profit to be 77.8/86.9/9.83 billion yuan for 24-26, respectively (the previous value of 85.6/9.39 billion yuan in 24/25). Comparable to the 24-year Wind, the average PE was expected to be 11.6 times. Considering that the company's traditional business accounts for a relatively high share, the company was given 9.9 times PE in 24 years, with a target price of 24.45 yuan (previous value 25.75 yuan) to maintain a “purchase”.
The customer structure continued to be optimized in '23, and the interior and exterior business grew steadily by sector: 1) The dominant business interior and exterior parts achieved revenue of 113.07 billion yuan in '23, an increase of 8.6% over the previous year.
Among them, car lamp sales volume +9.5% to 23.42 million units, average unit price +3.4%, driving Huayu Vision's revenue +13.2% YoY to 15.3 billion yuan; sales volume of instrument panel/door panel/seat products maintained steady growth, +2.3%/2.0%/3.2%, respectively; 2) Functional parts revenue +5.7% YoY to 28.54 billion yuan, of which sales volume of driveshaft/EPB products was +8.9%/16.1% YoY; 3) Metal forming and mold/electronic/electronic/thermal processing business revenue was +14.1% YoY/+14.1% 7% /+4% to 100.8/72.5/580 million yuan.
The company's customer structure was further optimized in '23, and customers outside of SAIC Motor Group accounted for 53.82% of revenue (49.57% in '22), and Tesla Shanghai/BYD/Chery became the top 1/3/4 domestic non-industry customers respectively. In addition, independent brands accounted for more than 40% of the new orders received during the year.
Joint ventures are increasing their earnings year on year, and efforts are being made to reduce costs and increase efficiency
In '23, the company's comprehensive gross margin was -0.9 pct to 13.3% year on year, and the gross margin of the main business was -1.0 pct to 12.65% year on year; net margin was 4.8%, -0.3 pct year on year. Specifically, the net interest rate of electronic and electrical products fell 5.6 pct year on year, affecting net profit of about -356 million yuan, mainly due to the proceeds from the sale of 27% of the shares of participating companies in '22; joint ventures including Natif and Bosch Huayu contributed 2.56 billion yuan in investment income in 23, a slight increase of about 0.5% over the previous year. In '23, the company continued to reduce costs and increase efficiency and reduce office operating expenses. The management rate was -0.4 pct to 4.74% year on year, the sales rate was +0.04 pct to 0.69% year on year, and the R&D rate was -0.3 pct to 4.22% year over year.
Focusing on intelligent electrification, high-value products are expected to help optimize the business structure in 23 years. The company closely follows the development opportunities of automobile electrification and intelligence, and accelerates the technological innovation transformation of advantageous businesses. In the cockpit sector, the company relies on platform-based capabilities to provide systematic smart cabin solutions to obtain higher bicycle supporting value; in terms of electrification, a full range of drive motors/electronic control products covering 400V-800V, which have been newly targeted by SAIC GM and Zero Run, and the 800V silicon carbide self-developed controller project is also progressing smoothly; in the field of smart vision, the company's latest digital full-color interactive floor lamp products have been supported and mass-produced, and the cost of new products such as digital interactive headlights has been drastically reduced. Relying on the industrialization of new technologies and products, the company is expected to continue to achieve breakthroughs in revenue volume and structural optimization.
Risk warning: Downstream customers' vehicle production and sales fall short of expectations, and the profitability of new products falls short of expectations in the short term.