On the evening of March 29, the company released its 2023 annual report. For the full year of 2023, the company achieved revenue, net profit of 8.151 billion yuan, 362 million, and 309 million, respectively, +0.00%, -7.26%, and -18.25% year-on-year, and operating income remained stable; gross sales margin was 14.55%, +1.78pct; and net sales profit margin was 4.65%, year-on-year -0.42pct.
Fourth quarter revenue increased year over year. In the fourth quarter, the company achieved revenue of 2,274 billion yuan, +32.58% year-on-year; gross profit margin of 12.57%.
Traditional motorcycle engine business sales and revenue both increased: in 2023, “danger” and “engine” coexisted in China's motorcycle market, and the deep transformation of motorcycle products broke through, achieving a year-on-year increase in sales and revenue; sales of motorcycle products were 2,520,400 units, +12.98% year over year; product revenue was 3.364 billion yuan, +18.72% year over year. The company has a prominent position as a leading domestic motorcycle engine, and years of technical experience have built up the company's basic market. At the same time, the company continues to increase intelligent manufacturing, complete the transformation of 2 intelligent production lines, and further improve production efficiency.
Traditional general machinery and terminal products business: The company strengthens business collaboration and complementarity between the competitive advantages of the “power” products of the wholly-owned subsidiary Tongji Company and the competitive advantages of Dajiang Power's “terminal” products, continuously optimizes the layout of general machinery products, and develops new products while improving traditional ventilation products. At present, the company has launched innovative products such as 24V DC generators, plant protection drone charging generators, household energy storage, and personalized agricultural machinery to accelerate the adoption of intelligent, low-carbon and energy transformation trends, and promote the realization of the value of a full range of product ecosystems.
The aviation engine business+new energy business+high-end parts business will build the second growth engine for the company's performance and enhance the company's ability to sustain multiple businesses in the medium to long term.
Aeronautical power: In March 2023, 5 aeronautical products, including aero-piston engines and variable pitch propellers, were awarded the “First (Set) Major Technical Equipment New Product in Chongqing in 2023”. In terms of products, the company has released more than 20 derivatives and propeller products to enter the drone and light general aviation aircraft circuit. In terms of market expansion, the company adopted a “two-legged” strategy for domestic and overseas markets. In the domestic market, the company focuses on developing light aerodynamics (general aviation), industrial-grade drone power markets and above; in overseas markets, the sales network, mainly in Europe, has completed the initial layout, and products have been successfully sold in developed European countries such as France, Germany, and Italy, accelerating the pace of becoming the world's leading integrated service provider for aerodynamics systems. The “Implementation Plan for Innovative Application of General Aviation Equipment (2024-2030)” released on March 27, 2023 clearly mentions “continuing to promote batch delivery of 100-200 horsepower piston engines”. The company's aviation development products are mainly distributed in this range:
C100/C115/C115HT/C145/C145HT/C12/C115/C145/C145HT (electric jet)
New energy: The company's new energy business focuses on two major industries: new energy power systems and energy storage. The product layout mainly involves electric power systems business, energy storage business, and hydrogen energy business. The company completed the acquisition of 60% of the shares in Dongguan Lithium Smart Energy Co., Ltd., and its household and commercial energy storage system products have been launched. Power batteries have been exported to North America and used in various fields and scenarios such as golf carts, forklifts, and motorhomes; Dongguan Lithium Smart has actively deployed sodium-ion battery products and has achieved small-batch production and marketing. In terms of hydrogen energy business, it has mastered the ability to integrate medium- and low-power fuel cell systems, and plans to build a hydrogen energy green demonstration application park, all of which will promote the transformation and upgrading of green energy.
High-end components: The company is based on production line level business, with factory-level digital systems as the fulcrum, and structural parts business as the driving force to complete the construction of a new Avita parts digital casting plant. At the same time, the layout of new energy three electric products continues to expand. In terms of aluminum alloy casting, the new foundry project already has small-batch production capacity. It is mainly used for key aluminum alloy parts such as electronic control and electric drives for new energy vehicles to help make automobiles lighter.
Investment advice: The company's revenue increased dramatically in the fourth quarter, and the basic market business is recovering. It is expected to achieve profits of 647/7.38/828 million yuan in 24/25/26, respectively, corresponding to 14.4/12.6/11.2 XPE. The company's aero-piston engines are expected to benefit from the low-altitude economy, so we upgraded our investment rating to “Highly Recommended” for the first time!
Risk warning: New businesses such as general aviation have fallen short of expectations, GM's support ratio for major overseas customers has fallen short of expectations, and demand in the motorcycle market has declined.