Key points of investment:

The target price was lowered to $22.74 to maintain an increase in holdings rating. Considering the impact of increased competition in the industry on the company's profit, the company's 2024-2025 EPS forecast was adjusted to 2.50 (-0.42) /2.73 (-0.70) yuan, added 3.04 yuan to the 2026 EPS forecast, referring to the comparable company giving the company 8.33 times PE in 2025, and lowering the target price to 22.74 (-1.20) yuan (originally 23.94 yuan) to maintain the shareholding increase rating.

Revenue continued to grow in 2023, and the results were generally in line with expectations. The company released its 2023 annual report and achieved annual revenue of 168.59 billion yuan, an increase of 6.5% over the same period. Net profit attributable to mother was 7.21 billion yuan, up 0.2% from the same period, and realized deduction of non-net profit of 6.50 billion yuan, an increase of 0.6%. Faced with the impact of increased competition in the industry, the company actively adopted measures such as cost optimization, and net profit was relatively stable throughout the year.

Q4 Performance increased month-on-month, and the volume of NEV supporting business is expected to continue to increase.

In the fourth quarter of 2023, the company achieved revenue of 47.03 billion yuan, 4.6% increase, 5.5% increase, net profit to mother of 2.47 billion yuan, 6.4% increase, 30.2% increase, and realized deduction of non-net profit of 2.36 billion yuan, 7.3% increase, and 34.8%. Among the company's new orders, the share of support amounts for new energy vehicle models continues to rise, and related businesses are expected to continue to bring in additional volume.

The customer structure continues to be optimized, and the core business is expected to achieve new growth through customers outside the industry. In 2023, 53.8% of the company's revenue came from automakers other than SAIC Motor, an increase of more than 4 pcts over the same period last year (49.6% for the same period). Core businesses such as seats and passive safety have been targeted by global customers such as Volkswagen, GM, Audi, BMW, Mercedes-Benz, and Tesla. In the medium to long term, the company is expected to achieve new growth by opening up global markets.

Risk warning: The downstream vehicle price war intensifies, and the development of new products or new customers falls short of expectations