Introduction to this report:
The company released its 2023 annual report, and its performance soared. With the rapid growth of new energy customers and overseas customers, and the excellent performance of new businesses such as electroplating, while benefiting from falling raw material prices, the company's performance is expected to grow rapidly in the future.
Key points of investment:
The target price was raised to 32.71 yuan, and the increase rating was maintained. The company released its 2023 annual report, and the results were in line with expectations. Adjusted the company's 2024/2025 EPS of 1.49 (+0.06) /1.84 (+0.02) yuan, and added the 2026 EPS forecast of 2.21 yuan. Considering the high growth of the company's downstream customers, the company was given 22 times PE in 2024, which is higher than the average of comparable companies, and the target price was raised to 32.71 yuan (originally 31.34 yuan).
Performance has increased dramatically, and profitability has increased significantly. In 2024, the company achieved revenue of 2.32 billion yuan, +23.2% year-on-year, and realized net profit of 280 million yuan to mother, +71.2% year-on-year. Benefiting from the consolidation of the electroplating business, improved customer structure and declining raw material prices, the annual gross margin reached 25.1%, +9.7 pct year on year, and the annual net profit margin reached 12.0%, +7.3 pct year on year.
The welding business grew dramatically, and the profit of the electroplating business exceeded expectations. Benefiting from the expansion of new energy customers such as Tesla, the company's stamping parts business achieved +8% year-on-year revenue in 2023; benefiting from SAIC Motor's rapid growth in overseas sales and +65% year-on-year revenue in the division business; benefiting from the strong performance of downstream customers after the emission standards were switched, the electroplating business subsidiary achieved net profit of 90.62 million yuan, exceeding the profit guarantee agreement of 78.19 million yuan at the time of acquisition.
New energy customers and overseas customers have high growth potential, and future performance is expected to grow further.
High-growth NEV companies such as Xiaomi Auto and Ideal Auto are important customers of the company. The release of new models such as the Xiaomi SU7 in 2024 will bring a significant increase in performance to the company's stamped parts business; the company's largest customer, SAIC Motor, is booming overseas, and the company's split assembly business is expected to maintain high growth.
Risk warning: risk of declining sales of major customers; risk of rising raw material prices, etc.