The company released the 2023 annual report and the 2024 quarterly report. The performance increased by 9.77%/8.56% year-on-year respectively. The company's performance was steady, moderate and positive, and the NEV sector entered the fast track of development; the purchase rating was maintained.
Key points to support ratings
2023/2024Q1 results increased 9.77%/8.56% year on year respectively: the company released the 2023 annual report, achieving revenue of 30.420 billion yuan, up 32.21% year on year; realized net profit of 4.742 billion yuan, up 9.77% year on year, after deducting non-net profit of 4.071 billion yuan, up 20.12% year on year; the company also disclosed the report for the first quarter of 2024, achieving net profit of 811 million yuan, up 26.67 million yuan year on year %, in line with the expectations of previous performance forecasts.
The leading edge in the field of general automation is remarkable, and revenue growth is steady: in 2023, the company's general automation sector achieved operating income of 15.038 billion yuan, up 24.17% year on year, gross margin reached 44.74%, a slight decrease of 0.84 percentage points over the previous year; 2024Q1's general automation business achieved revenue of about 3.2 billion yuan, an increase of about 10% year on year. We believe that under the trend of weak macroeconomic recovery, the company's general automation sector is still showing a steady growth trend, mainly benefiting from an increase in its own market share. According to Rui Industrial data, the company's general servo system ranked first in the domestic market share in 2023, but the market share further increased by 6.70 percentage points to 28.20% over the same period last year.
Business segments such as industrial robots performed well: in 2023, general inverters, general servo systems, PLC & HMI, and industrial robots in the general automation sector achieved sales revenue of about 5.2 billion yuan, 6 billion yuan, 1.6 billion yuan, and 800 million yuan respectively. The year-on-year growth rates were about 20%, 20%, 22%, and 43%, respectively. Among them, industrial robots, as relatively new downstream application scenarios, had a low revenue base and a relatively rapid growth rate.
The NEV business entered the harvest period, and the revenue growth rate remained at a high level: in 2023, the company's NEV & rail transit business revenue increased 78.69% year on year to 99.20 billion yuan, and sales volume increased 126.18% year on year to 2.23 million PCS; 2024Q1, the company's NEV business continued its high growth trend, achieving sales revenue of about 2.3 billion yuan, an increase of about 150% year on year. Thanks to the SOP volume of customer-specific models and the company's delivery guarantee, 2023-2024Q1's NEV business has entered a harvest period, and sector revenue has grown rapidly.
valuations
Under the current share capital, combined with the company's annual report and the background of weak macroeconomic recovery, we adjusted the company's 2024-2026 earnings forecast to 2.07/2.46/2.82 yuan (the original 2024-2026 forecast was 2.43/3.00/- yuan), corresponding to a price-earnings ratio of 28.6/24.1/21.0 times; maintaining the purchase rating.
The main risks faced by ratings
The manufacturing boom fell short of expectations; price competition exceeded expectations; demand in the NEV industry fell short of expectations; NEV customer expansion fell short of expectations; and material costs rose.