Core views:
The company has performed well in 23 years. According to financial reports, the company achieved operating income of 7.474 billion yuan in '23, +34.9% year-on-year, and net profit after deducting pre- and post-return net profit of 8.91/855 million yuan, respectively, +27.6%/+36.8% year-on-year. Among them, in Q4 '23, the company achieved operating income of 2,368 billion yuan, +27.7%/+17.8%, net profit before and after deduction of 297/313 million yuan, respectively, +34.4%/+65.7% year-on-year, and +23.9%/+45.1% month-on-month respectively.
By product, the company's sales volume of intelligent electronic control products/disc brakes/lightweight brake parts was +48.9%/+26.6%/+31.3% year-on-year, respectively, with impressive sales performance by product.
The profit level is stable, and the ability to control expenses has been further improved. According to financial reports, the company's 23-year gross profit margin, net profit margin, and period expense ratio were 22.6%/11.9%/9.0%, respectively, compared with the same period in '22; among them, Q4 gross margin, net profit margin to mother, and period expense ratios were 23.1%/12.5%/8.6%, respectively, and -0.2 pct/+0.6 pct/-0.7 pct, month-on-month, +0.5 pct/+0.0pct, respectively.
Increase Mexico's production capacity and deepen the global layout, and the overall chassis supply capacity is becoming more and more perfect. According to the annual report, the first phase of the company's Mexico project was put into operation at the end of the third quarter of '23, and is implementing the expansion of the second phase of the Mexican project. At the same time, the company is gradually developing integrated controls such as line-controlled motion, wire-controlled steering, and active suspension, and the company's overall chassis supply capacity is improving.
Profit forecast and investment advice: The company is a leader in the rapidly advancing domestic braking sector. Overseas business expansion and the gradual establishment of a global chassis supply capacity may open up new growth space for it. In the short to medium term, it has benefited from significant increases in the contribution of EPB, line control, and domestic substitution in the shift business, and is optimistic about overseas business expansion and global chassis supply potential in the long term. We expect the company's 24-26 EPS to be 2.69/3.54/4.66 yuan/share, respectively. Combined with historical valuations and comparable valuations, the company will be given a 24-year 30-fold PE valuation, corresponding to a reasonable value of 80.81 yuan/share, maintaining a “buy” rating.
Risk warning: Competition in the industry intensifies, customer expansion falls short of expectations, technology upgrades fall short of expectations, etc.