Incidents. Times New Materials released its 2023 annual report on March 29th. Operating income for the year was 17.538 billion yuan, +16.65% year on year; net profit attributable to shareholders of listed companies was 386 million yuan, +8.30% year over year; net profit attributable to shareholders of listed companies after deducting non-recurring profit and loss was 421 million yuan, +147.94% year over year.
The company's business in various fields continues to grow and steadily promote production and operation. In 2023, the company successfully achieved its annual goals and achieved large-scale engineering applications in various business areas. In terms of industry classification, rail transit business revenue totaled RMB 1,875 billion, and gross margin of 32.64%; sales revenue of the Industrial and Engineering Division was RMB 1,665 billion, +1.00% YoY, gross margin of 27.15%; in terms of wind power, annual sales of wind power blades totaled 6.701 billion yuan, +24.87% YoY, gross margin of 12.37%; automotive product revenue totaled 6.86 billion yuan, +23.12% YoY, gross margin of 12.27%; new materials achieved phased breakthroughs, but due to the new materials section, In 2023, revenue from technical services decreased to $436 million, -26.56% year-on-year, and gross margin of 30.38%.
The company's traditional business is developing steadily, and its market share is constantly increasing. In 2023, the company carried out reform and innovation work around the development direction of the national war and new industries, and continued to launch new technologies and products. The R&D cost was 830 million yuan, +22.41% over the same period last year, and the R&D cost rate was 4.73%. 1) Rail transit: Domestic market orders increased by more than 20% in 2023, rail vehicle market share steadily increased, and the overall share ranked first in the industry. At the same time, facing the future market, the new products developed by the company have achieved full business coverage of next-generation major models such as the CR450, and have basically formed a new “trinity” industrial pattern of body, vehicle side, and roof.
In overseas markets, the company has increased the number of new orders in the fields of vehicle suspension damping, infrastructure lines, and new industries, and has completed a multi-site layout around the world. 2) Industry and engineering: In terms of system capacity building, the “Times New Materials Urban Rail Transit Vibration and Noise Reduction System +1.0” was officially released. The system can achieve full-system collaboration, full-band control, full-path design, and full-life cycle attention for urban rail systems.
The company adheres to the “high-tech, international and diversified” industrial pattern, deepens technology research and development, and continuously innovates products. 1) Wind power: The company completed the development and design of a series of blades such as 100m class onshore, 11Xm grade offshore, and 2.8m pitch 195; the world's first self-developed recyclable thermosetting resin blade successfully went offline, achieving the company's new breakthrough in the application of new materials for wind power blades. Obtain batch orders in domestic and overseas markets and further promote cooperation with customers. The company issued an announcement on March 29 to establish a Vietnamese subsidiary responsible for the production and operation of the company's wind power blade factory in Vietnam, which is conducive to the continuous improvement of the competitiveness of the company's products overseas. 2) New materials: The company has made a series of breakthroughs in the synthesis, modification and engineering application of new polymer materials. By mastering high-performance polyurethane formulations and processes, key technologies for the preparation and application of fibrillated nanofibers, ultra-low quantitative precision coating and composite technology, etc., the import substitution capacity of multiple products has been improved.
Investment advice. The company's business is centered on polymer materials, and is committed to engineering applications in various fields. Technology research and development continues to advance, achieving new breakthroughs in wind power and new materials, and broad future market space. Currently, the company has sufficient orders, plenty of room for development, and maintains a “buy” rating. The estimated net profit for 2024-2026 will be 688 million yuan, 925 million yuan, and 1,056 million yuan, respectively, and EPS will be 0.83 yuan, 1.12 yuan, and 1.28 yuan, respectively, and the corresponding PE will be 13.7 times, 10.2 times, and 8.9 times.
Risk warning: risk of international operation and management; risk of accounts receivable; risk of development and promotion of new industries and fields; risk of product quality.