Incidents:
On April 2, 2024, Beite Technology released its 2023 annual report: in 2023, the company achieved revenue of 1,881 billion yuan, +10.3% year over year; net profit to mother was 51 million yuan, +10.7% year over year; net profit after deduction was 43 million yuan, +44% year over year.
Investment highlights:
Revenue grew steadily in 2023, and the lightweight aluminum forging business expanded rapidly. The company's revenue in 2023 was 1,881 billion yuan, +10.3% year over year. By business: the chassis parts business achieved revenue of 1,285 billion yuan, +6.97%, mainly due to the company actively developing product lines and overseas markets. The rapid growth of new energy projects combined with steady climbing of export projects contributed significantly; the aluminum alloy lightweight business achieved revenue of 127 million yuan, +182.12% year over year. With the continuous penetration of new energy vehicles, mass production of new projects climbed rapidly; the air conditioning compressor business achieved revenue of 443 million yuan, +3.68% year over year , in line with the recovery of the commercial vehicle market.
Net profit without return to mother increased significantly year over year in 2023, and gross margin improved year over year. The company's net profit after deduction in 2023 was 43 million yuan, +44% over the same period last year. There were three main reasons: 1) The return in gross margin was higher than the revenue growth rate. Thanks to various measures such as cost dilution, reduction in bulk material costs, and production efficiency improvements brought about by the further release of production capacity in the company's chassis parts and aluminum alloy business segments, the company achieved a gross profit margin of 17.42% in 2023, +0.28pct; 2) Other revenue increased by 7.1 million yuan compared to the same period last year, an increase of 7.1 million yuan over the same period last year. 39.5%, mainly due to the application of value-added tax deduction policies by several of the company's high-tech enterprises in accordance with the policy; 3) The reduction in credit impairment losses. The company's credit impairment losses decreased by 27.97 million yuan compared to the same period last year, mainly due to changes in the credit impairment loss ratio for recovering large amounts of overdue payments and accounts receivable from the previous year in 2023.
A leader in the automotive chassis parts segment, the three major incremental businesses open up room for growth.
The company has been deeply involved in the automotive chassis field for more than 20 years, leading the domestic steering gear rack and shock absorber piston rod segments, and has maintained a dominant position in the market segment for many years. We believe that at present, the company's chassis parts business revenue has maintained steady growth. In the future, it will mainly rely on the three major businesses of compressors, aluminum forging, and lightweight manufacturing to achieve rapid growth: 1) In terms of compressors, domestic commercial vehicle sales in January-January 2024, +14%. Currently, the company's compressor business customers are mainly BAIC Foton, FAW Pentium, Sinotruk, and Foton Daimler commercial vehicle customers. It is expected that the future will continue to grow in line with the recovery trend of the commercial vehicle market; 2) In terms of aluminum forging and weight reduction, the company's aluminum forging and lightweight business is currently in the early stages of development. Including well-known domestic and foreign automakers such as BYD, ZF (ZF), and Sachs, and Tier 1, mass production of new projects will rise rapidly in the future, and the lightweight business is expected to rise rapidly; 3) In terms of humanoid robots, the production process accumulated by the company's chassis parts business is highly homologous with the production process of screw screw products. In 2023, the company ushered in the opportunity to enter the humanoid robot industry chain and actively cooperate to promote sample development of humanoid robot screw products according to customer needs.
Profit forecast and investment rating The company's three major businesses, compressors, aluminum forging and lightweight, and humanoid robots, are expected to achieve total operating revenue of 20.94, 25.23, and 3.19 billion yuan in 2024-2026, with year-on-year growth rates of 11%, 21%, and 26%; achieving net profit of 0.77, 1.48, and 242 million yuan, year-on-year growth rates of 51%, 93%; EPS is 0.21, 0.41, and 0.67 yuan. The PE valuation corresponding to the current stock price is 70, 36, and 22 times, respectively. First coverage, giving a “buy” rating.
Risks suggest that raw material prices continue to rise; NEV sales fall short of expectations; production capacity at new plants falls short of expectations; customer concentration is too high; new product development progress falls short of expectations; and the risk of large fluctuations in secondary market liquidity and stock prices for small market capitalization companies.