Dolly Technology released its 2023 annual report. The company achieved revenue of 3.91 billion yuan in 2023, +16.6% year-on-year; realized net profit of 50 billion yuan, +11.2% year-on-year. Among them, the fourth quarter of 2023 achieved revenue of 1.17 billion yuan, +21.0% year-on-month, and realized net profit of 110 million yuan, -16.6% year-on-year and -21.2% month-on-month.
The company's net profit margin in 2023 was 12.7%, -0.6 pct year on year; gross margin was 23.2%, -1.3 pct year on year.
The company's sales/management/R&D expenses in 2023 were 0.3%/2.6%/3.3%, respectively, -0.01pct/+0.2pct/-0.4pct year-on-year, respectively. According to the company's 2023 annual report, the year-on-year increase in management expenses was mainly due to the increase in employee remuneration and office expenses in the current period. The year-on-year increase in R&D expenses was due to the establishment of additional R&D bases in Chuzhou and Changzhou.
Deeply tied to high-quality OEMs, benefiting from sales growth for NEV's core customers. The company has established stable partnerships with traditional automakers such as SAIC Volkswagen, SAIC-GM, and SAIC Passenger Vehicle, and has become a core supplier for mainstream NEV companies such as Tesla, Ideal Auto, NIO Auto, Zero Sports, and BYD. The company's spare parts products for new energy vehicles are mainly stamped parts, integrated die-casting parts and stamping dies. In 2023, the sales revenue of the company's NEV customers accounted for more than 70% of total revenue. According to the company's prospectus and 2023 annual report, the company's top five customers have all accounted for more than 75% of revenue since 2019, and high customer concentration is a characteristic of the stamping industry.
We believe that the company's stamping business revenue is expected to increase further as the core customer mass produces new models and increases in sales volume.
Actively lay out an integrated die-casting business to contribute to performance growth. According to the company's 2023 annual report, the company has set up four integrated die-casting production lines in Yancheng, Jiangsu and Lu'an, Anhui. Among them, the Yancheng 6100T integrated die-casting production line has been put into use, and mass production and sales have been achieved. According to the announcement that the company has been designated for customer projects, the company will provide integrated die-cast floor parts for a leading domestic NEV company. Mass production is expected to begin in 2025, with an estimated total sales amount of about 21-23 billion yuan during the life cycle. At present, the company's integrated die-casting business has accumulated a good R&D and production base, and has achieved a high product yield, which will be a strong complement to the company's integrated and integrated supply of molds, stamping and welding. According to the company's 2023 annual report, the “Changzhou Dolly Auto Precision Parts and Integrated Chassis Structural Parts Project” is also under construction.
Profit forecast and investment advice: The company's 2024/25/26 revenue is expected to be 46/56/65 billion yuan, net profit to mother of 6.1/7.3/8.3 billion yuan, and EPS of 3.31/3.97/4.52 yuan, corresponding to the closing price on April 24, 2024, which is 11/9/8 times PE, respectively. Referring to comparable companies, the company was given 13-14 times PE in 2024, with a corresponding reasonable value range of 42.98-46.29 yuan. Maintain an “better than the market” rating.
Risk warning: customer sales fall short of expectations; raw material prices have risen sharply; integrated die-casting business expansion falls short of expectations.