Net profit in 2023 increased 42% year-on-year, and NEV drive gear products accounted for 27.6% of revenue. In 2023, Shuanghuan's revenue was 8.07 billion yuan, +18.1% year on year, net profit of 80 million yuan, +40.3% year on year; 23Q4 Shuanghuan achieved revenue of 2.2 billion yuan, +9.4% year on month, +0.8% month on month, realized net profit to mother of 230 million yuan, +31.5% year on year, +2.8% month on month, after deducting non-net profit of 250 million yuan, +34.5% year on month, +21.1% month on month; the company's heavy truck automatic transmission gear business and new energy vehicle gears The business, etc. all showed a good growth trend. Revenue from NEV drive gear products was 2.23 billion yuan, accounting for 27.6%. At the same time, the company continued to promote internal cost reduction and efficiency, independent innovation, etc., to effectively improve manufacturing capacity, reduce unit costs, and promote steady growth in the company's performance.
The product structure continued to improve, gross margin increased month-on-month, and cost reduction and efficiency continued to advance. 23Q4 Shuanghuan sales/management/R&D/finance rates are 1.2%/4.9%/5.5%/0.5%, respectively, +0.3/+1.4/1.1/-0.1pct month-on-month; 23Q4 double ring gross profit margin 24.6%, +2.1pct year on month, +2.9pct month-on-month, net profit margin 10.0%, +1.6pct, month-on-month, year-on-month increase in profitability is mainly expected 1) Product volume boosts capacity utilization and promotes continuous release of scale benefits; 2) Continuous promotion of cost reduction and efficiency (flexible manufacturing) Digitalization has increased per capita efficiency by 20%); 3) The product structure continues to improve, the new energy business continues to expand, the production capacity of new energy vehicle drive gears has reached 5 million units, and the highly profitable commercial vehicle business continues to grow (+71.3% YoY in commercial vehicle gear revenue in '23). As of March 31, Shuanghuan had repurchased a total of 7339,400 shares of the company's shares, accounting for 0.86% of the company's total share capital, demonstrating the company's operating confidence.
Looking forward to the future, the promotion of a global strategy and expansion of the category matrix are expected to open up room for growth. Shuanghuan has seized two rounds of upgrade opportunities. Round 1: the gear outsourcing trend brings order opportunities from third party suppliers; round 2:
The explosion of new energy vehicles raised entry barriers+ spawned demand for gears. Shuanghuan relied on advantages such as forward-looking production capacity layout+batch supply capacity to lock in factory orders and achieve deep binding. We believe that today Shuanghuan coincides with the third round of upgrade opportunities, namely ① going overseas: advancing global strategies, building overseas factories (Hungary invests 120 million euros) and breaking through with customers, and is expected to open up long-term space in the future; ② platformization: We believe that Shuanghuan's core strengths lie in the three dimensions of product (consistency+performance), management (cost reduction and efficiency), and R&D (technology and development capacity) to build a platform-based supply system supported by products such as car-side gears+robot reducers. Relying on this advantage, it is expected that the product line will continue to open up a new growth curve.
Risk warning: Risk of automobile sales falling short of expectations, increasing competition in the industry, and falling short of expectations in product development.
Investment advice: Domestic high-precision gear experts maintain a “buy” rating. Optimistic about the increase in performance brought about by Shuanghuan going overseas to open up long-term growth space and product line development, and maintain the 24-25 profit forecast. It is estimated that in 24/25/26, Shuanghuan Transmission's net profit will be 10.45/13.53/ billion yuan, corresponding EPS is 1.22/1.59/1.90 yuan, and the corresponding PE is 18/14/11x, maintaining a “buy” rating.