Incident: The company released its 2023 financial report. For the whole year, the company achieved operating income of 168.594 billion yuan, +6.52% year-on-year, realized net profit of 7.214 billion yuan, +0.15% year-on-year, and realized net profit without return to mother of 6.503 billion yuan, +0.62% year-on-year.
Our analysis and judgment:
SAIC Motor's share continues to decline, and diversified customers and multi-product strategies have led to a steady rise in the company's operations.
Diversified customer structure: The company's share of SAIC's system revenue has continued to decline in recent years. SAIC Volkswagen, SAIC-GM, and SAIC passenger car together accounted for 46.1%/43.8%/41% of the company's total revenue from 2021 to 2023. The downward trend is remarkable, and the customer structure is diversified. Dependence on a single customer continues to decline, and the business structure is steadily transforming to electrification and intelligence. Diversified product structure: In the company's revenue composition in 2023, SAIC Volkswagen and SAIC-GM were 31.79 billion yuan and 21.28 billion yuan respectively, down 5.04% and 3.01% respectively from 33.48 billion yuan and 21.94 billion yuan in 2022, while SAIC Volkswagen sold 1.21 million units in 2023, down 8.01% year on year, and SAIC-GM sold 1.01 million vehicles, down 14.45% year on year. The company's revenue side declined slightly, far higher than the decline in sales volume, which highlighted the company's supply of products Diversification and the continuous increase in the value of bicycles have established excellent stability. We believe that, on the one hand, as the share of SAIC-Volkswagen and SAIC-GM new energy vehicles continues to increase, the variety of new energy components supplied by the company has increased. On the other hand, the company has made continuous breakthroughs in braking systems, new energy core components, and intelligent products, gaining more fixed points and opening up room for revenue growth.
In 2023, in the expansion of electrified and intelligent components: in the field of smart cockpits, modular and systematic solutions to achieve mass production support for customer projects; in the field of intelligent lighting, to achieve supporting mass production of the latest digital full-color interactive floor lamp products; in the field of intelligent driving assistance, new products such as self-developed front radar, angle radar, in-cabin vital signs detection radar, electric door collision avoidance radar, etc., have been initially established; in the field of electric drive systems, new electronic control and development capabilities for pure solid-state lidar have been established; The high-voltage motor project was targeted, and the development of the Great Wall medium- and high-power electric drive system assembly project and the 800V silicon carbide self-developed controller project was successfully promoted. The orderly expansion of the electrification and intelligent parts business has brought new momentum to the company's performance growth.
Product restructuring caused short-term fluctuations in gross margin. In 2023, the company's five major businesses achieved revenue of 113,070 billion yuan/10.078 billion yuan/10.078 billion yuan/28.540 billion yuan/7.252 billion yuan/579 billion yuan, respectively. Among them, the revenue of electronic and electrical components rose 18.68% year on year, faster than the overall revenue growth rate, accounting for 0.46 pct to 4.55% year on year. Driven by the scale effect, the gross margin of the electronic and electrical components business rose 3.26 pct to 13.76% year on year, but the slow growth rate of the company's traditional product revenue combined with the rise in foreign labor, materials, energy and other costs caused a decline in gross margin, affecting the overall gross margin ratio. The gross margin of the company in 2023 was 12.99% and 10.05% respectively, -1.85 pct and -1.44 pct, respectively, affecting the company's overall gross margin decline of 0.90 pct to 13.32%. The company is in a period of business structure transformation, and gross margin fluctuates in the short term, but the gross margin of the emerging business electronic and electrical components is significantly higher than the traditional business. We believe that with the continuous rise in the share of revenue from electrification and intelligent components, the company's gross margin is expected to maintain a steady upward trend in the long term.
Expense rate control is good, and profitability remains stable. In 2023, the company's sales/management/finance/R&D expense ratios were 0.69%/4.74%/0.05%/4.22%, respectively, +0.04pct/-0.40pct/-0.30pct, respectively. The increase in sales expenses was mainly due to the increase in three-package loss costs brought about by new product business development. The increase in financial expenses mainly came from an increase in loan interest. The decrease in R&D expenses was mainly due to the fact that major R&D projects in the early stages entered mass production and delivery period, and there was some R&D demand for new projects Reduced, the company's effective control of expense ratios hedged some of the effects of declining gross margin and maintained stable profitability.
Investment advice: We expect the company's revenue for 2024-2026 to be 1767.33/1829.74/187.133 billion yuan, respectively, and net profit to mother of 74.93/80.54/8.343 billion yuan, respectively. The corresponding diluted EPS would be 2.38 yuan, 2.55 yuan, and 2.65 yuan respectively, maintaining the “recommended” rating.
Risk warning: 1. Risk of downstream customer sales falling short of expectations; 2. Risk of new product business expansion falling short of expectations; 3. Risk of increased market competition.