Key points of investment
Company announcement: In 24Q1, the company expects to achieve net profit of 136-146 million yuan, +75.4-88.3% year on year; net profit without deduction of 131-141 million yuan, +80 to 93.7% year on year, exceeding expectations. There are two reasons why the company's profit release continues to exceed expectations: 1) the automotive electronics business and precision die-casting business are affected by sales volume from downstream core supporting customers, increasing revenue-side volume; 2) benefiting from scale effects and improvements in company management in terms of costs.
New customers benefit from the rapid release of new vehicles and the improvement in the new vehicle cycle. The revenue scale of automotive electronics reached 4.826 billion in 2023, an increase of 28.85% over the previous year. Since the second half of 2023, the automotive electronics business has clearly entered the volume cycle. At the customer level, the company deepens partnerships with existing customers and expands new customer groups in the international market, breaking through overseas customers such as Volkswagen SCANIA, FAW-Toyota, SAIC Volkswagen, and Maserati. The company's precision finial business had revenue of 1.66 billion yuan in 23 years, up 25.4% year on year, and sold 360 million sets, up 5.8% year on year. The company is expanding new energy customers such as Ideal, Xilis, Aeon, NIO, and BYD on the basis of its original independent customers. Intelligent automotive parts projects have increased, and the company's revenue is expected to continue to grow steadily based on the volume of downstream supporting models.
R&D investment has increased, and HUD/cockpit domain control products have climbed rapidly. In 2023, the company's R&D investment reached a record high. Among them, automotive electronics R&D investment accounted for 12.08% of its revenue, and new products accelerated iterative upgrading and mass production. Based on the first localized cockpit domain control platform integrated automatic parking, the company launched an integrated cabin and parking integrated platform solution; the company's HUD products continue to be developed and the technology is forward-looking. AR-HUD products fully cover mainstream technology routes and have all achieved mass production. They have taken the lead in launching VPD products in China and have been targeted by the first domestic mass production project; screen display products have launched a series of new products and technologies such as integrated penetrating screens, curved screens, smart surfaces, and OLED display technology. New products have entered a rapid release cycle, and the company's profit release due to the combined scale effect has entered the fast track.
Profit forecast and investment rating: We maintained the company's 2024-2026 revenue forecast of 90.3/112.3/13.28 billion yuan, +27%/+24%/+18% year over year; maintained the 2024-2026 net profit forecast of 6.5/8.9/1.12 billion yuan, +40%/+37%/+25% year over year, corresponding PE was 23/17/14 times, respectively, maintaining a “buy” rating.
Risk warning: Overseas market expansion fell short of expectations; the recovery in downstream passenger car demand fell short of expectations, and the passenger car price war exceeded expectations.