Incident: The company released its 2023 annual report. The company's revenue for 23 years was 2.32 billion yuan, +23.2% year over year; net profit to mother was 280 million yuan, +71.2% year over year; deducted non-net profit of 270 million yuan, +266.4% year over year.
Comment:
The gross margin of the main business increased significantly, and profits ushered in a significant increase. The company achieved revenue of 2.32 billion yuan in 2008, +23.2% year on year; realized net profit of 280 million yuan, +71.2% year on year; realized deducted non-net profit of 270 million yuan, +266.4% year on year. By business, the stamping parts business achieved revenue of 1.27 billion yuan (YoY +7.6%), gross profit margin of 8.57% (YoY +5.20pct); the segmented assembly business achieved revenue of 590 million yuan (YoY +64.6%), gross profit margin 41.57% (YoY +8.17pct); precision electroplating achieved revenue of 150 million yuan (YoY +14.2%), gross profit margin of 79.42% (YoY -2.11pct); the mold business achieved revenue of 130 million yuan (YoY +39.9%), gross profit margin (4.14% YoY )- 5.72pct). The increase in revenue was mainly due to the gradual release of production capacity in Ningde Zhende and Zhengzhou Junrun, a gradual increase in supporting volume, and a sharp rise in the split assembly business; the increase in net profit was mainly due to a significant increase in the gross margin of the stamping and assembly business.
Exports from SAIC Motor, a major customer, grew steadily, and deliveries of Xiaomi cars brought in additional volume. The company's major customers are SAIC Motor Group, and Ningde Zhende and Zhengzhou Junrun are the sole suppliers of vehicle body assembly processing services at SAIC Motor's Ningde and Zhengzhou plants, respectively. SAIC's Ningde and Zhengzhou plants both produce export models including the MG brand. Of these, the Zhengzhou plant exported more than 310,000 vehicles in 23 years, accounting for 70% of the total production of the base. From January to January '24, SAIC Motor's export sales volume was 227,000 units, and the overseas sales target for '24 and '25 was 1.35 million units, respectively. As SAIC Motor's export capacity is gradually released, the company's supporting volume is expected to gradually increase. In addition to SAIC Motor, the company is actively expanding new car builders such as Tesla, Ideal, Xiaomi, and Zhiji. Xiaomi cars were officially delivered in early April. According to the EasyCar app, Xiaomi cars delivered 1095 and 2,407 units in 4.1-4.7 and 4.8-4.14, respectively. With the delivery volume of Xiaomi cars, the company's share of new energy revenue is expected to continue to break through. The company's NEV customers account for 30% of sales in '23, and the company expects this ratio to exceed 50% in '24.
The company plans to pay a dividend of 95 million yuan in '23, and issuing convertible bonds is expected to further expand production capacity. The company announced the 2023 annual profit distribution plan. It plans to distribute a cash dividend of 3.80 yuan (tax included) to all shareholders for every 10 shares. The total proposed cash dividend is 95 million yuan, which combines 23 million yuan in semi-annual dividends of 25 million yuan, accounting for a total of 43.18% of the company's net profit returned to mother in 2023. In September 2023, the company announced a convertible bond plan. It plans to raise no more than 900 million yuan in total capital to build a new automotive body parts welding production line at the Zhengzhou plant and an automated stamping and welding production line at the Shanghai factory. It is expected to further expand production capacity and enhance customer support service capabilities.
Profit forecast: The company is deeply tied to SAIC Motor, and the basic revenue market is stable. At the same time, it is gradually entering new energy customers, and is expected to welcome a full increase in volume. Without considering the debt conversion project, we expect the company's net profit to be 370 million yuan, 450 million yuan, and 550 million yuan in 2024-2026, corresponding to PE of 14, 12, and 10 times, respectively.
Risk factors: Risk of customer growth falling short of expectations, risk of original customer sales falling short of expectations, risk of raw material price fluctuations and supply shortages.