Zhongding Co., Ltd. released its 2023 performance report: in 2023, it achieved operating income of 17.25 billion yuan, an increase of 16% over the previous year; net profit attributable to shareholders of listed companies was 1.13 billion yuan, an increase of 17% over the previous year. Net profit attributable to shareholders of listed companies after deducting non-recurring profit and loss was 1.0 billion yuan, an increase of 35% over the previous year. The fourth quarter of 2023 achieved operating income of 4.48 billion yuan, a year-on-year decrease of 2% and a month-on-month decrease of 2%; realized net profit attributable to shareholders of listed companies of 260 million yuan, an increase of 19% year-on-year and a decrease of 26% month-on-month.

Release the performance forecast for the first quarter of 2024: Net profit attributable to shareholders of listed companies was achieved in the first quarter of 2024 of 320 to 380 million yuan, an increase of 22% to 45% over the previous year; after deducting non-net profit of 270 to 330 million yuan, an increase of 26% to 53% over the previous year.

Business conditions improved in the first quarter of 2024. In the first quarter of 2024, the company continued to develop steadily around the goals of “global modular management, technological iterative upgrading, and industrial reinforcement and complementation”, further promoted the improvement of cost control and fine management of overseas factories, continuously optimized the customer structure, and enhanced the overall competitiveness of products. The company's global business is growing steadily. While maintaining the steady growth of its traditional business, the company continues to promote the implementation and growth of the incremental business of air suspension systems, lightweight chassis systems, and thermal management systems. Currently, the incremental business is developing well, and new orders continue to be placed. In the future, the company will continue to focus on the strategic goals of the core product of the intelligent chassis system to promote the intelligent transformation of the company's business.

Optimistic about the long-term growth potential of the air suspension business: As of January 2024, AMK China, or Anhui Amico, has received orders from many new domestic car builders and leading traditional independent brands. Anhui Anmeke has received orders with a total output value of about 10.4 billion yuan. At the same time, the company is also speeding up the development of hardware assembly products for other suspended systems.

Profit forecast and investment advice: We expect Zhongding Co., Ltd. to achieve revenue of 173/202/23.4 billion yuan and net profit to mother of 11.3/14.4/1.75 billion yuan in 2023/24/25, corresponding EPS of 0.86/1.09/1.33 yuan. Referring to comparable companies, we believe that the reasonable PE of Zhongding Co., Ltd. in 2024 is 13 to 15 times, with a reasonable value range of 14.18 to 16.36 yuan.

Risk warning: Global passenger car sales have fallen short of expectations, and raw material prices have risen sharply.