On the evening of March 27, the company released its 2023 annual report. For the full year of 2023, the company achieved revenue, net profit of 7.474 billion yuan, 891 million, and 855 million, respectively, +34.9%, +27.5%, and +45.4% year on year; gross sales margin 22.57%, +0.13pct year on year; net sales margin 12.19%, year-on-year -0.46pct, year-on-year.

Revenue and profit increased month-on-month in the fourth quarter, and net interest rates continued to rise month-on-month. In the fourth quarter, the company achieved revenue, net profit attributable to mother, net profit after deducting net profit of 2,368 million yuan, 297 million, and 313 million respectively; +27.7%, +34.4%, and +65.6% year-on-year, +17.8%, +24.3%, and +44.9% month-on-month. Gross sales margin 23.09%, -0.25pct year on year, +0.48pct month on month; net sales margin 12.78%, +0.83pct year on year; +0.61 pct month on month.

Management costs and R&D expenses are continuously optimized. The fourth quarter management expense ratio was 1.82%, -0.12 pct year on year, -0.37 pct month on month; R&D expense ratio was 6.04%, -1.13 pct year on year, +0.37 pct month on month. The total cost rate for the period was 8.61%, -0.77pct year-on-year, and +0.01pct month-on-month.

Sales of smart electronic control products are growing steadily. In 2023, sales volume of intelligent electronic control products was 3.72 million sets, +48.93% YoY; 2.84 million sets of disc brakes, +26.55% YoY; 10.19 million lightweight units, +31.32% YoY.

Mechanical steering products sold 2.33 million sets.

The number of new projects targeted is increasing rapidly.

The company has a total of 419 research projects, 319 new fixed projects, and 226 new mass production projects. The main project situation:

1. Disc brakes: 137 new fixed projects have been added, including 45 new energy models.

2. Lightweight products: 37 new designated projects have been added, including 23 new energy models.

3. Electronic electronic control products:

① Electronic parking brake system (EPB): 47 new fixed-point projects have been added, including 33 new energy models.

② Electronic Stability Control System (ESC): 3 new fixed-point projects have been added, including 2 new energy models.

4. Intelligent driving products:

① Advanced Driver Assistance Systems (ADAS): 17 new fixed-point projects have been added, including 5 new energy models.

② Line Control System (WCBS): 50 new designated projects, including 42 new energy models.

5. Steering system products:

① Electric power steering system (EPS): 8 new fixed projects have been added, including 7 new energy models.

② Mechanical steering gear (MSG): Eleven new fixed-point projects have been added, including 5 new energy models.

③ Mechanical steering column: 10 new fixed-point projects have been added, including 5 new energy models.

Investment advice: Line control has added sufficient new targets, and all businesses have achieved good growth. Electronic control products continue to grow at a high rate. It is expected to achieve profits of 12.04/15.56/1.919 billion yuan in 24/25/26, respectively, corresponding to 19.7/15.2/12.3 XPE, and continue to be highly recommended!

Risk warning: Intelligent development falls short of expectations, and downstream demand falls short of expectations.