Revenue achieved high year-on-year growth in '23, with a focus on new market development
The company published an annual report for '23 and a quarterly report for '24, of which it achieved revenue of $1,060 million (+40.41% yoy) and net profit of $117 million (-23.94% yoy) in '23. Considering the slowdown in downstream demand growth and increased market competition, we lowered the company's business revenue growth rate and gross margin assumption, and the cost ratio assumption during the upward period. The company's corresponding EPS for 24-26 years is estimated to be 3.94/5.56/7.20 yuan (value 5.31/7.69 yuan 24-25 years ago), respectively. Referring to the consistent forecast of the comparable company Wind, the average PE for 24 years was 22 times. Considering that the company first released emerging markets and actively expanded overseas markets, the company was given 26 times PE in 24 years, corresponding to a target price of 102.51 yuan (previous value of 118.11 yuan), maintaining a “gain” rating.
The gross margin declined slightly in '23, and the increase in expenses during the period reduced the company's profit margin in '23 was 40.89%, a slight decrease of -1.04pct year on year; the net interest rate was 11.04%, -9.34pct year on year, mainly due to the significant increase in the cost ratio during the period. The company's sales/management/R&D/finance expense rates in '23 were 6.97%/7.77%/11.41%/0.41%, respectively, compared to +2.46pct/+1.98pct/+4.15pct/+0.58pct. Among them, sales expenses, management expenses, and R&D expenses all increased significantly, mainly due to the increase in the company's share payment expenses, which accelerated overseas market expansion and new product development; the increase in the financial expense ratio was mainly due to the increase in short-term loans from the company's banks. In addition, the company's cash flow performance was good. The net cash flow from operating activities in '23 was 84.7058 million yuan, +123.33% over the same period last year.
Strong in the NEV and energy storage markets, NEV revenue increased in 23 years. Companies have always focused on the middle and high-end markets for power fuses. After successively entering emerging industries such as communications, new energy wind power generation, rail transit, etc., they have focused on the NEV and energy storage markets. In '23, the company achieved revenue of 1,060 billion yuan, +40.41% year-on-year. Among them, new energy vehicles/new energy wind power generation and energy storage/ communications/ rail transport/ industrial control power supplies and other industries achieved revenue of 5.96/3.45/0.41/0.18/0.59 billion yuan respectively, +54.66%/+10.92%/+10.92%/+29.35%/51.48% compared with the same period last year. In terms of new products, smart fuses began to be supplied to customers in batches in '23.
High quality customer resources to accelerate competitiveness in the international market
The company has established stable cooperative relationships with many domestic and foreign companies in the fields of new energy vehicles, new energy wind power generation and energy storage, communications, rail transit, etc. In the new energy vehicle market, the company's terminal vehicle users now basically cover major domestic brands of passenger cars and commercial vehicles, and has supplied international brands such as Tesla, Daimler, Hyundai, SAIC Volkswagen, FAW-Volkswagen, and SAIC-GM in batches. Among them, in overseas markets, the company announced in December 23 that it had obtained an exclusive global quota of 110 million yuan from a leading German car company. The company expects to start SOP in January '25. In the new energy wind power generation and energy storage market and communications market, the company's main customers include industry leaders such as Sunshine Power, Ningde Era, Huawei, and Verdi.
Risk warning: Sales of new energy vehicles fell short of expectations, new installed capacity of wind power, photovoltaics, and energy storage fell short of expectations, and rising raw material prices led to rising costs