Incident: On March 29, 2024, the company released its 2023 annual report. The report shows that in 2023, the company achieved operating income of 33.167 billion yuan, an increase of 10.19% over the previous year; in 2023, it achieved net profit of 1,476 million yuan, an increase of 61.26% over the previous year, and realized net profit without deducted return to mother of 999 million yuan. The net profit without deducted return to mother was a loss of 230 million yuan in the same period last year.

In 2023, the company's vehicle exports accelerated, and revenue grew steadily throughout the year: the company's revenue was accompanied by an increase in vehicle sales. In 2023, the company sold 310,000 vehicles, up 9.93% year on year, including 80,200 light buses, up 3.87% year on year, 62,800 trucks, down 2.95% year on year, 59,700 pickup trucks, down 5.11% year on year, and 107,300 SUVs, up 39.06 percent year on year. In 2023, the company exported about 95,000 vehicles, of which more than 70,000 Ford SUVs were exported, helping to increase the company's revenue.

In 2023, Jiangling Import and Export Corporation's revenue was 9.207 billion yuan, compared to 5.907 billion yuan in the same period last year, an increase of 55.87% over the same period last year. The company's vehicle exports accelerated in 2023, contributing to a steady increase in revenue throughout the year.

The company's cost reduction and efficiency continued to advance, compounded by minority shareholders' profit and loss and income tax policy, and operating profit increased dramatically for the full year and 2023Q4: the company's gross margin in 2023 was 15.38%, an increase of 0.65pcts over the previous year. We believe it was mainly reflected in the optimization of staffing and the scale effect of the passenger car business.

In 2023, the company's expense ratio was 10.65%, down 1.74 pcts year on year. Sales, management, R&D, and finance expenses changed by -0.38, -0.24, -1.05, and -0.07pcts respectively. We believe it was mainly due to factors such as the company's revenue growth and process improvement. Compared with 2022, the company's operating profit in 2023 increased significantly compared to 2022, thanks to factors such as an increase in gross margin (impact amount of about 374 million yuan), reduction in cost rates (impact amount of about 576 million yuan), payment of license fees for Ford models by Jiangling Ford Motor Technology (Shanghai) Co., Ltd., and income tax policies. Looking at the single quarter, net profit from 2023Q4 was 466 million yuan, up 135% and 66%, respectively. It was mainly due to lower cost ratios, which decreased 4.82 and 3.37 pcts, respectively. Among them, R&D expenses decreased by 3.59 and 4.18 pcts, respectively, as well as the impact of income tax policies and minority shareholders' profits and losses.

The Jiangling Ford Ranger and Bronco have been launched one after another, and the Ford brand's export sales are growing rapidly, and it is expected to continue to contribute to profit growth in the future: Ford's next-generation pickup Ranger was unveiled at the 2023 Guangzhou Auto Show in November 2023. The new car is positioned as an off-road mid-size pickup truck, produced by Jiangling Ford. The new car was officially launched in December 2023, starting at 145,800 yuan. In addition, Ford recently officially announced that it has opened pre-orders for all of its new Liema Bronco models. The pre-order price range is 30-450,000 yuan, which has a significant price advantage over competitors such as Wrangler and Land Rover Defender. Bronco will launch 5 versions, including the Everglades, with a total of 7 models, and the new cars will be officially launched at the end of April. Furthermore, the company's Ford brand SUVs are exported to Southeast Asia, Latin America and other regions, which shows that sales continue to grow. With the successive listings of Ranger and Bronco, export sales have continued to grow, which is expected to continue to contribute to the company's profit growth.

Profit forecast: The company is expected to achieve revenue of 423, 490 and 53.1 billion yuan in 2024-2026, and net profit to mother of 18.51, 20.71, and 2,484 billion yuan, corresponding PE of 14.08, 12.58, and 10.49 times, respectively, giving it a “recommended” rating.

Risk warning: Competition in the passenger car industry intensifies, sales fall short of expectations; commercial vehicle sales fall short of expectations; new product launch progress falls short of expectations, etc.