Target price is 27.09 yuan, maintaining a “buy” rating

Aikolan released its annual report. In 2023, it achieved revenue of 1,047 billion yuan (yoy +28.19%), net profit to mother of 10.6894 million yuan (2022: -105.439 million yuan), and deducted non-net profit of 18.2807 million yuan (2022: -494.64 million yuan). The company achieved revenue of 240 million yuan in 1Q24, -2.6% year on year, and net profit of 14 million yuan to mother, +64.3% year over year. We expect the company's 2024-2026 EPS to be 1.29, 1.84, and 2.37 yuan respectively. Comparable to the 2024 Wind, the average PE is expected to be 17.5 times. Considering the company's market development and leading technology research and development, the performance flexibility is high. The company was given 21.0 times PE in 2024, with a target price of 27.09 yuan (previous value of 31.65 yuan), maintaining a “buy” rating.

Production and sales in the commercial vehicle industry increased year-on-year

In 2023, the commercial vehicle market rebounded to the bottom and achieved restorative growth due to factors such as stable, moderate and positive demand in the consumer market, and driven by various favorable policies. According to statistics from the China Association of Automobile Manufacturers, China's commercial vehicle production and sales volume in '23 was 403.7/4.31 million units, up 26.8/ 22.1% year on year. Among them, light diesel truck production was 945 million units, up 7.22% year on year, and sales volume was 930,500 units, down 0.65% year on year.

Revenue and gross margin grew at the same time, successfully reversed losses

The company's annual revenue was 28.19% to 1,046 billion yuan, gross margin 1.10pp to 18.22% year on year, and net profit of 10.6894 million yuan (2022: -105.439 million yuan). The main influencing factors include: 1) the diesel engine business and gasoline engine business achieved steady growth, with non-road country 4 leading to increases; 2) the implementation of the national shipping standard, the sales volume of the subsidiary CNOOC Blue Airlines increased significantly to achieve profit; 3) Continued cost reduction and efficiency, and the efficiency of various costs and expenses was improved. 16.6%; 4) Exchange losses of RMB 5.50,800 yuan due to the decline in the exchange rate of RMB against the euro; 5) Accumulated asset depreciation of RMB 28.67 million, of which goodwill depreciation was RMB 20.3 million, and credit impairment of RMB 12.28 million was calculated.

Risk warning: The rise in prosperity in the commercial vehicle industry fell short of expectations, sales of non-road products fell short of expectations, and the localization process of diesel engine products in Country 6 fell short of expectations.