Incident: The company released its 2023 annual report. In 2023, it achieved revenue of 3.189 billion yuan, +0.6% year on year, net profit to mother of 136 million yuan, or -39.3% year on year. Of these, 23Q4 achieved revenue of 830 million yuan, -9.6% year on year, and net profit loss of 0.4 billion yuan to mother, which changed from profit to loss.
Revenue: Revenue of $3.189 billion in '23, +0.6% YoY, below expectations for the second half of the year, is under pressure from downstream customers in the communications business and automotive business: ① The annual revenue of communications structural components was 1.42 billion yuan, or -15.1%, of which 23H1/H2 revenue growth rates were 3.4% and -32.4%, respectively; ② The annual revenue of automotive components was 1.62 billion yuan, +12.7% year over year, of which 23H1/H2 revenue growth rates were 26.4% and 3% respectively.
Profit: The decline in gross margin and the pressure on profit is expected to be due to the new production capacity climbing phase and customer demand falling short of expectations. The gross profit margin for 23 was 15.54%, 1.73 pct year on year, with gross profit margin of 17.2% for communication structural parts, +0.48pct year on year, 12.07% year on year, and -3.78pct year on year. The decline in gross margin is expected to be due to new production capacity investment but customer demand falls short of expectations. At the end of 22/23H1/23, the company's fixed assets were 1.7 billion yuan, 1.98 billion yuan, and 2.53 billion yuan respectively. In the second half of '23, the revenue of both the communications business and automobile business was under pressure. As a result, marginal depreciation expenses due to additional consolidation increased. The depreciation expenses for fixed assets in 2022/2023 were 180 million yuan and 250 million yuan, respectively.
It is proposed to acquire European assets and accelerate the global layout. The company announced that 1) it plans to acquire 97% of the German company VOIT Automotive GmbH in cash and indirectly acquire 51% of Fonderie Lorraine S.A.S.; 2) It plans to acquire the Polish company Voit Polska Sp with 10.528 million euros in cash Z O. 100% equity.
The target company is mainly engaged in aluminum alloy die-casting, machining and cold stamping business. The main customers include ZF, Bosch, Brose, Audi, Volkswagen, etc. ZF, the largest customer of German companies, accounted for more than 70% of revenue in 2020-2023, and the top five customers accounted for more than 90% of revenue. Through this acquisition, Merisign will directly obtain localized production capacity and technology centers in Europe, and obtain customer resources from the target company, accelerate cooperation between Merisign and European OEMs and world-renowned Tier 1 companies, and further increase Merisign's share in the global market. At the same time, Merisign and the target company will have multi-dimensional synergy effects in R&D, production, sales, and international management, which will significantly enhance the company's competitiveness in the global market, customer high-quality aluminum die-casting rookies, and platform-based development+acceleration of globalization will help growth in the medium term.
The automobile business binds customers such as Tesla & BYD & NIO & Huawei & Xiaomi, and the communications business binds customers such as Ericsson & Huawei. We have proven many times in history that we can dig deep into customer strength. While stabilizing the main business, we are actively expanding the aluminum die-casting market and magnesium die-casting market in the field of energy storage, overcharging, and smart driving, to achieve platform-based development. Globalization has continued to accelerate since 2023, continue to deepen the North America+European layout through epitaxial mergers and acquisitions, and strengthen global competitive advantage and market share.
Profit forecast: Considering the downstream demand and pattern of the telecommunications business and automobile business, there is also uncertainty about the company's rising profitability due to the investment of new production capacity. The company's net profit for 24-25 years was adjusted to 160 million yuan to 180 million yuan (previous values were 3.9 million yuan and 540 million yuan), adding 220 million yuan in 2026 profit forecast, and the year-on-year growth rate was 15%, 17%, and 22%, corresponding to the current PE 30X, 26X, and 21X, maintaining the “buy” rating.
Risk warning: demand for new energy falls short of expectations, aluminum prices have risen sharply, new business expansion falls short of expectations, etc.