The performance was in line with expectations. The company's revenue in 2023 was 168.594 billion yuan, up 6.5% year on year; net profit to mother was 7.214 billion yuan, up 0.2% year on year; net profit after deducting non-return to mother was 6.503 billion yuan, up 0.6% year on year. Revenue for the fourth quarter was 47.035 billion yuan, up 4.6% year on year, up 5.5% month on month; net profit to mother was 2.474 billion yuan, up 6.4% year on year, up 30.2% month on month; net profit after deducting non-return to mother was 2,361 billion yuan, up 7.3% year on year, up 34.8% month on month. In 2023, the company plans to pay dividends of 7.5 yuan for every 10 shares to shareholders.
The gross margin improved month-on-month in the fourth quarter, and the expense ratio declined slightly. The gross profit margin for the full year of 2023 was 13.3%, down 0.9 percentage points year on year; the gross profit margin for the fourth quarter was 14.5%, down 0.8 percentage points year on year, up 2.3 percentage points from month to month.
The cost rate for the full year of 2023 was 9.7%, down 0.5 percentage points year on year. Among them, the management fee rate/R&D expense ratio decreased by 0.4/0.3 percentage points year on year, respectively, and the financial expense ratio increased 0.2 percentage points year on year, mainly due to increased interest on loans. Net cash flow from operating activities for the full year of 2023 was 11.316 billion yuan, an increase of 13.3% over the previous year, mainly due to the increase in the company's operating income during the current period and the impact of some payment settlement cycles.
The share of revenue from customers outside the industry has increased, and the internationalization of core business continues to be promoted. In 2023, the company's external vehicle customer revenue accounted for 53.82% of the main business revenue, an increase of 4.25 percentage points over 2022. Tesla Shanghai, BYD, FAW-Volkswagen, Chery Auto, etc. became the company's important external vehicle customers; in 2023, the company received new orders for new energy vehicles accounting for more than 65% of the supporting amount, and the supporting amount for independent brands accounted for more than 40%. The company is actively promoting the internationalization of its core business. The passive safety and car seat business under Yanfeng Auto Parts has obtained supporting targets for global customers such as Tesla, Volkswagen, GM, Audi, BMW, and Mercedes-Benz. Some businesses and products such as lightweight cast aluminum, fuel tank systems, and automotive electronics have also entered the European, American, Korean, Australian and Southeast Asian markets.
It is expected that optimizing the customer structure and going overseas for core business will help the company achieve long-term healthy development.
Accelerate the large-scale application of intelligent and electrified products. The company follows the development trend of intelligent and electrification of automobiles, accelerates business technology innovation and transformation, and achieves mass production of smart cockpit solutions to obtain higher bicycle supporting value; digital interactive headlights and digital signal light series continue to iteratively develop, and the latest digital full-color interactive floor lamp products achieve supporting mass production; electronic control and high voltage motors are targeted by SAIC GM, Zero Run and other customers; Great Wall Motor's medium and high power electric drive system assembly projects and 800V silicon carbide self-developed controller projects are progressing smoothly; electric air conditioning compressors are Huawei, Xiaomi, Celis NIO, CHANGAN, GEELI, Customers such as Great Wall are equipped with new energy models, and thermal management system products are equipped with new energy models from customers such as BYD, Xiaopeng, BMW Brilliance, and Volvo; new products such as front radar, angle radar, in-cabin vital signs detection radar, and electric door collision avoidance radar developed in-house by Huayu Automotive Electronics have achieved mass production. It is expected that the intelligent and electrified business layout will continue to enhance the company's core competitiveness and help the company open up new growth space.
Adjust revenue, gross profit margin, expense ratio, etc., and increase the 2026 forecast. The 2024-2026 EPS is 2.30, 2.42, and 2.55 yuan respectively (the original 2024-2025 EPS was 2.47 and 2.70 yuan). Referring to comparable company valuations, the average valuation of comparable company PE in 2024 is 11 times the average valuation, and the target price is 25.3 yuan, maintaining the purchase rating.
Risk warning
Lower demand in the passenger car industry affected profits than expected, and price cuts for major supporting vehicles affected profits.