Incident: The company released its 2023 annual report and 2024 quarterly report. For the full year of 2023, the company achieved total operating income of 1.05 billion yuan, +3.18% year-on-year, and net profit to mother of 242 million yuan, +137.26% year-on-year. 24Q1 achieved total revenue of 276 million yuan, +6.85% YoY, -3.49% month-on-month, and net profit to mother of 52 million yuan, +1.29% YoY and -17.90% month-on-month. The performance was in line with expectations.
The company's gross margin rebounded sharply in '23, and continuing customer development helped the company maintain high profits. In 2023, the company achieved revenue of 1.05 billion yuan, +3.18% year-on-year, and a comprehensive gross profit margin of 35.81%, +6.43pct year-on-year. By business, the company's revenue accounts for metal-plastic polymer self-lubricating rolled bearings, bimetallic boundary lubrication rolled bearings, and metal-based self-lubricating bearings, respectively achieved revenue of 3.66/1.97/219 million yuan, +9.03%/-13.43%/+5.18% year-on-year, and gross margins of 49.31%/27.21%/34.19%, respectively, and +7.52/9.99/9.03pct. In 2023, the company continued to develop new customers in the automotive industry and obtain high-profit new projects brought by new customers, which guaranteed the company's profitability. Furthermore, copper prices stabilized in 23 years, and the company's construction machinery industry's sliding profits recovered.
The wind power sliding shaft market is expected to be released when the “roll-over” of wind power is underway. According to the “Application Status and Development Trend of Sliding Bearings in Wind Power Gearboxes”, wind power gearboxes using sliding shafts can increase torque density by 25%, reduce transmission chain length by 5%, gearbox weight by 5%, and cost by 15% compared to using roller shafts. The wind power bearing market space is estimated to reach 2 billion yuan by 2025. The company laid out the wind power field and built a new self-lubricating bearing project with an annual output of 14,000 sets of wind power generation. Some models of products have already been tested.
The company's bearings have been used in the nuclear power industry, and nuclear power sliding shafts are expected to increase the company's profits. As of 2023, China has 55 nuclear power units in operation, 26 units under construction, and 10 units approved in 2022 and 2023. The “14th Five-Year Plan” proposes that the installed operating capacity of nuclear power will reach about 70 million kilowatts by 2025, and components for all aspects of nuclear power are expected to enter the delivery period. The high-temperature heavy-duty self-lubricating bearings for nuclear power jointly developed by the company and Shanghai Nuclear Engineering Research and Design Institute Co., Ltd. won many honors, including the third prize of the Zhejiang Science and Technology Progress Award in 2023. The company's metal-based self-lubricating bearings have been used in the nuclear power industry, and it is expected that the company's performance will increase with the rapid development of installed capacity in the nuclear power industry.
Investment advice: The company's net profit for 24-26 is estimated to be RMB29/306.483 million yuan, +19.8%/+26.5%/+31.5% YoY, and EPS of 0.97/1.23/1.62 yuan respectively, maintaining the “gain” rating.
Risk warning: risk of price fluctuations of major raw materials, risk of macroeconomic cycle fluctuations, risk of exchange rate fluctuations