Core views

In 2023, the company's overall revenue was basically flat, but the trend of marginal improvement was obvious, mainly due to the gradual increase in customer targets starting in 2023Q3. The company's profitability has improved markedly, mainly due to factors such as lower raw material costs, lower technical costs, and lower cost rates during the period.

Looking forward to the future: ① The company continues to focus on NEV power systems, with obvious technological pioneering advantages; ② The company cultivates cutting-edge fields such as low-altitude aircraft as a new driving force for growth, and the low-altitude economic circuit is expected to open up new growth space for NEV products.

occurrences

In 2023, the company achieved revenue of 1,963 billion yuan, down 2.12% year on year, net profit to mother of 82 million yuan, up 234.78% year on year; net profit after deducting net profit of 31 million yuan, up 208.51% year on year.

Among them, Q4 achieved revenue of 703 million yuan in a single quarter, a year-on-year increase of 11.80%, net profit to mother of 39 million yuan, reversing year-on-year losses; net profit after deducting net income of 0.26 million yuan, an increase of 189.70% year-on-year.

Brief review

The marginal revenue improvement trend is obvious. Revenue from core products is basically stable and revenue is basically flat in 2023, but the marginal improvement trend is obvious. ① In 2023, the company's overall revenue was basically flat, mainly due to intense competition in the NEV market. Vehicle companies such as BYD, Aian, and Ideal contributed to the industry's major growth. The company's potential customers are being developed in an orderly manner, and large-scale supply has not yet been formed. ② In 2023, Q1-Q4's revenue growth rates were -26.86%, -10.42%, 6.25%, and 11.80%, respectively. The marginal improvement trend was obvious, mainly benefiting from fixed customer volume: In 2022, the company's “integrated core” 6-in-1 drive system using a flat wire motor scheme was targeted by many car companies such as Geely, SAIC Chase, JAC, Dongfeng Motor, and Hezhong Nacha. The new energy vehicle all-in-one power system products have a long cycle from fixed point to mass production. 2023Q3

Revenue from core products is generally stable. By product, the company's core product revenue remained basically stable. Among them, the power supply assembly, motor controller, and electric drive assembly business achieved revenue of 6.27, 6.24, and 581 million yuan, respectively, -6.60%, +8.16%, and +3.92% year-on-year, accounting for 93.34% of the company's overall revenue; the electronic throttle pedals and others, DC-DC converters, motors, and on-board charger businesses achieved revenue of 0.86, 0.19, 0.15, and 0.11 billion yuan respectively. , 47.86%. The revenue scale of these businesses is relatively small, accounting for 6.66% of the company's revenue, and the fluctuation is quite obvious.

The reduction in raw material costs, technical cost reduction, and period expense ratio increased profitability. In 2023, the company's gross profit margin and net interest rate were 17.06% and 4.20%, respectively, up 0.84 and 2.97 pcts year-on-year, respectively.

The increase in gross margin is mainly due to: ① The raw materials of the company's products mainly include electronic components, magnets, silicon steel sheets, enameled wire and aluminum structural parts. Prices of bulk materials have declined since 2023. According to Baichuan Yingfu and Wind, the average prices of domestic silicon steel and aluminum (A00) in 2023 were 18,699.63 and 5,411.91 yuan/ton, respectively, down 9.71% and 6.20%, respectively. ② The company continues to focus on the core field of new energy vehicles. Through technological innovation, the company realizes technology research and development and iteration, and reduces product costs. ③ The company gives full play to supply chain management capabilities, strengthens partnerships with suppliers, implements joint R&D strategies, and realizes joint cost reduction to cope with the cost pressure of market competition.

The increase in net interest rate was mainly due to: ① the increase in gross margin; ② the fee ratio for the period was 13.20%, a decrease of 0.23 pct over the previous year. Among them, sales, management, finance, and R&D were 2.09%, 3.37%, 0.32%, and 7.42%, respectively, and -0.23, +0.24, -0.28, and +0.05 pcts year-on-year, respectively. The equity incentive expenses that the company should contribute to sales expenses have decreased, so the sales expense ratio has decreased; interest on bank deposits has increased, so the financial expense ratio has decreased. ③ In 2022, the company calculated credit impairment losses of 110 million yuan for projects such as Weimar and Reading, so the net profit base is low.

The company has a clear technological pioneering advantage in the field of new energy electric vehicles, cultivating cutting-edge fields such as low-altitude aircraft, and the new power company's core product technology has a clear first-mover advantage. Product iteration continues: ① Power supply assembly: According to the NE era, the installed capacity of the company's automotive power assemblies in 2023 was 455,200 units, with a domestic market share of 6.5%, ranking in the top 3 tier 1 suppliers. At the same time as the number of models supporting power products has further increased, the company has launched a high-power density third-generation power supply assembly product based on the 800V high voltage architecture. It has strong competitive advantages in terms of volume, efficiency, electromagnetic compatibility, power density, cost, etc., and has achieved highly automated production, laying the foundation for further expanding market share. ② Motor controller:

In 2023, the company's electronic control installed capacity was 331,000 units, with a domestic market share of 4.0%, ranking fourth among Tier 1 suppliers. The company has advanced projects with SAIC Chase, FAW Volkswagen, Geely, etc., and completed projects such as Geely Remote Commercial Vehicle, Linde Forklift, Noli Forklift, and BYD Electric Motorcycle. ③ Electric drive assembly: Relying on the “integrated core” technology solution, the company has increased power density, improved the service life of the product, and enhanced the competitiveness of the company's products while meeting the requirements of miniaturization, weight reduction, and low cost. In 2023, the company achieved automated, large-scale, and platform-based production of a six-in-one power system; developed a third-generation power supply system with high power density, and achieved highly automated mass production this year; completed the scheme design of a fourth-generation drive system with high-pressure oil cooling technology, and achieved product verification in 2023.

The company fosters new growth momentum in cutting-edge fields such as low-altitude aircraft. Based on the advantages of miniaturization, lightweighting, platformization, and integration of drive systems and power systems, the company is comprehensively understanding electrification trends in other segments, such as low-altitude aircraft, agricultural machinery, exploration, shipping, etc., and is actively constructing systematic solutions in various segments to cultivate new growth momentum for the company in various segments. Looking forward to the future, with the advent of the electrification era in agricultural machinery, exploration, ships, low-altitude aircraft and other industries, the downstream application field of new energy power range products will be further expanded. In particular, the low-altitude economic circuit is expected to open up new growth space for them.

Profit forecasting and investment advice

Since its establishment, the company has focused on R&D and production of core components for electric drives for new energy vehicles, and has a leading technology advantage in single-tube parallel solutions.

Looking forward to the future, with the rapid development of new energy vehicles, the company is expected to continue to increase its market share and expand the market by relying on products with higher cost performance and higher energy density. However, on October 30, 2023, the company issued the “Notice on Granting Restricted Shares to Incentive Recipients of the 2023 Restricted Stock Incentive Plan” to implement the restricted stock incentive plan for 439 of the company's core management and R&D personnel, which is expected to incur more share payments in 2024.

Therefore, we expect the company's net profit for 2024-2026 to be 68.45, 126.39, and 161.49 million yuan, respectively, -16.89%, +84.66%, and +27.77% year-on-year, respectively. The corresponding PE is 64.07, 34.70, and 27.16 times, respectively, maintaining the “buy” rating.

Risk analysis

① Industrial policy adjustments and risks faced by the industry: The NEV industry is a key support industry for the country's strategic development and is expected to become a pillar industry of the national economy. From an industry perspective, the development of new energy vehicles still faces many challenges, such as price fluctuations of raw materials such as batteries and bulk materials, changes in electricity price policies, etc., which may cause fluctuations in production and sales in the NEV industry, which will have an impact on the company's product demand.

② The company's customer demand fluctuates and product competition heightens the risk: On the one hand, traditional fuel vehicle companies introduce strong promotion policies, and potential consumers may be diverted from fuel vehicle product sales in the short term; on the other hand, the NEV market is fiercely competitive, and the sales gap of NEV terminals from different brands is large. Leading car companies such as Tesla, BYD, and GAC Aian are not currently company customers, so the company's product sales may fluctuate.

③ Customer credit risk: Although the company's current customers are mainly automakers and some special purpose vehicle manufacturers, which have cooperated with the company for a long time, have good reputation, strong financial strength, and strong recoverability of accounts receivable, it is still not ruled out that individual customers experience operational difficulties, causing accounts receivable not to be recovered in a timely manner.

④ Risk of loss of core technical personnel: As a high-tech enterprise, the company has a high demand for high-end technical talents, and the loss of core talents will adversely affect the company's future development.