Company announcement: In 2023, revenue, net profit to mother, and net profit after deducting non-net profit were 129.30 billion yuan, 13.93 billion yuan, and 1,330 billion yuan respectively, up 11.02%, 11.42%, and 10.84% year-on-year respectively. Among them, Q4 revenue in 2023, net profit to mother, and net profit after deducting non-net profit were 2,999 million yuan, 3.25 million yuan, and 251 million yuan respectively, up 8.11%, 16.35%, and 13.23% year-on-year respectively.
The 2023 results are in line with expectations. In 2023, revenue, profit to mother, and net profit after deducting non-net profit amounted to 129.30 billion yuan, 13.93 billion yuan, and 1.30 billion yuan, respectively, with year-on-year increases of 11.02%, 11.42%, and 10.84%, respectively. Among them, Q4 revenue for 2023, net profit to mother, and net profit after deducting non-net profit were 2,999 million yuan, 3.25 million yuan, and 251 million yuan respectively, up 8.11%, 16.35%, and 13.23% year-on-year respectively.
The level of profit continues to rise. The company's gross margin in 2023 was 36.89%, up 2.82 percentage points year on year, and Q4 2023 gross margin was about 41.19%, up 8.07 percentage points year on year. Q4 The increase in gross margin was mainly due to the exchange rate affecting gross profit margin during the same period last year, the merger and acquisition of Hongxingtai reduced costs, and good sales of high-margin products. The total cost rate of the company in 2023 was 18.71%, +1.01 percentage points year on year. The fee ratio increased slightly due to depreciation and amortization, business development, etc., and remained stable overall.
Relay revenue continues to grow, and market share continues to rise. The company is a leading enterprise in the field of relays. In 2023, relay products achieved revenue of 11.657 billion yuan, an increase of 11.04% over the previous year. Among them, the global share of power relays and HVDC relays increased to 31.6% and 40%. At the same time, the overall gross margin of relays was 38.72%, up 2.96 percentage points from the previous year, and profitability remained high. The company has maintained rapid growth and expanded its leading edge in various segments such as high voltage DC, electricity, and automotive relays.
The HVDC business continues to grow rapidly, and new categories clarify development ideas. a) The high-voltage DC relay business for new energy vehicles continues to grow rapidly. The commissioning of Indonesia's Hongfa Phase II and the registration of a German factory have further enhanced the company's competitiveness overseas. b) Determine and implement the “75+” strategy to expand the category, clarify the development ideas for the five new categories of switching electronics, connectors, capacitors, fuses, and current sensors, and lay a solid foundation for future growth.
Investment advice: Maintain a “Highly Recommended” rating. The company's global market share of all types of relays continues to increase, the company maintains leadership in the 7 major relay business categories, clarifies development ideas for 5 new categories, including low-voltage electrical appliances, continues to advance and optimize its global layout, and its overall competitiveness continues to increase. Maintain the “Highly Recommended” rating and give a target price of $32-35.
Risk warning: The economic downturn affects the company's product demand, the decline in the value of HVDC products for bicycles, and upward pressure on raw materials.