Key points of investment
Accelerate the focus on the main line of the automotive business, and rapidly improve profitability
On March 28, 2024, Xiangshan Co., Ltd. released its annual report. In 2023, the company achieved revenue of 5.788 billion yuan, +20.16% year over year; realized net profit of 161 million yuan, +86.86% year over year; realized deducted non-net profit of 208 million yuan, +32.68% year over year. By business, the auto parts manufacturing business achieved revenue of 5,073 billion yuan, +25.11% year on year, gross margin of 23.29%, gross margin +0.61 pct year on year; the weighing equipment business achieved revenue of 673 million yuan, -5.12% year on year, gross margin of 33.34%, gross margin of +1.78 pct year on year.
The share of the new energy business grew rapidly, and the automotive parts manufacturing business continued to expand applications in new directions, achieving revenue of 4.128 billion yuan, or +18.00%; the company's NEV auto parts and charging and distribution business achieved revenue of 944 million yuan, +69.89% year-on-year. The new energy related business grew rapidly, and the share of the new energy business increased to 16.31% of the overall business. Among them, the company's charging products completed American Standard and European Standard certification and product launch overseas in 2023, and it is expected that cooperation with major global customers will continue to deepen cooperation with major customers around the world. At the same time, the company is developing charging products based on NACS standards to expand the US market. In terms of charging and distribution products, the company's R&D and manufacturing capabilities for charging and distribution products have been further improved, and its business scope has been gradually expanded. It has received orders for electric vehicles such as flying cars. It is expected that development work will be completed in March 2025.
Foreign customers of smart cabin components grew steadily, and the company continued to expand its domestic smart car smart cockpit components to achieve revenue of 4.128 billion yuan, +18.00% over the same period last year. The company has the world's top design concepts and processing technology in the luxury accessories business. Luxury brands such as Audi, Mercedes-Benz, and BMW are all long-term customers of the company and have strong certainty. Production and sales in major global automobile markets continued to pick up in 2023. Among them, Volkswagen Group's global sales volume was 9.24 million units, up 11.8% year on year; BMW Group's global sales volume was 1.9 million units, +17.4% year over year; BMW Group sold 2.49 million units globally, +1.5% year over year. Good customer sales laid the foundation for the company's revenue growth. At the same time, the company is expanding cooperation with domestic high-end national brand customers, and the scale of cooperation between the company and automakers such as Ideal, NIO, and Extreme Krypton is gradually expanding.
Profit forecasting and valuation
The company's revenue for 2024-2026 is estimated to be 72.32, 83.60, and 9.582 billion yuan, and net profit to mother of 2.01, 2.60, and 312 million yuan, corresponding to current PE 21.57, 16.69, and 13.91 times, maintaining a “buy” rating.
Risk warning
The risk of declining sales for traditional OEM customers and the risk that the development of the new energy business falls short of expectations.