The company's revenue increased year-on-year in 2023, and net profit declined due to factors such as low gross profit of new production lines. Hanchuan Intelligence released the 2023 annual report. It achieved full-year revenue of 1,339 million yuan, an increase of 17.21% over the previous year; achieved net profit of -85 million yuan; and achieved a gross profit margin of 20.15%, a year-on-year decrease of 8.15 pcts. The increase in revenue was mainly due to increased revenue from the battery equipment and automotive equipment business. Due to the new production line supplied by the company to new customers in 2023, gross margin was low. At the same time, overseas market development and operating expenses increased, R&D expenses increased, and accrued credit impairment losses and asset impairment losses were high, which in turn affected the overall profit level and led to a decline in net profit. By business, automotive intelligent equipment achieved revenue of 625 million yuan, an increase of 16.33% over the previous year, gross margin of 29.17%, a year-on-year decrease of 6.49 pcts. Combined with the 2023 annual report, expense ratio, and stage of business development, we lowered the 2024 and 2025 profit forecasts and added 2026 profit forecasts. We expect net profit to be -0.40/0.1 billion yuan (original value of 3.32 billion yuan) for 2024-2026, respectively, and -0.22/0.06/0.57 yuan/share for EPS, respectively. The current stock price corresponding to 2024-2026 PE is -69.7/272.7/27.6 times, respectively, considering the company's customer structure Continuous optimization, the automotive high-speed wiring harness business progressed at an accelerated pace, and maintained a “buy” rating.

Continue to expand quality customers and inject vitality into performance growth

In the automotive intelligent equipment sector, the company maintains long-term stable cooperative relationships with leading auto parts companies such as Tyco Electronics, ZF, Valeo, Bosch Group, and BYD; in the lithium battery equipment business sector, the company has high-quality customers such as Everweft Lithium, Sunwoda, Penghui Energy, Zhuhai Guanyu, and Panasonic Group; in the power exchange equipment business sector, the company has successively developed high-quality customers such as Ningde Era, GCL Energy, Geely Group, and Blue Valley Smart Energy. In 2023, the company reached the first cooperation with Yazaki Group, Rosenberg, and Kyocera Group in the company's advantageous business areas, and successfully developed mainstream customers for electric drive systems and domain controllers.

The company attaches importance to R&D investment and strengthens technological innovation advantages

In 2023, the company invested 107 million yuan in R&D, +54.63% year-on-year. In the field of automotive equipment, the company successfully launched the PA400 next-generation pin insertion machine product and successfully delivered it to the client; the flat wire motor stator product line has completed technical issues in many key areas and has been successfully delivered to partners for small-batch mass production; pulse strong magnetic welding technology has now cooperated with leading customers, and has completed products of different specifications and has been recognized by customers.

Risk warning: downstream demand falls short of expectations, market competition is fierce, product development progress falls short of expectations, etc.