Event: The company released its 2023 annual report and 2024 quarterly report. In 2023, the company achieved revenue of 1,060 billion yuan, a year-on-year increase of 40.41%, achieved net profit of 117 million yuan, a year-on-year decrease of 23.94%, and realized net profit without deduction of 114 million yuan, a year-on-year decrease of 22.32%.
Looking at a single quarter, 23Q4 achieved revenue of 302 million yuan, a year-on-year increase of 11.43%, and realized net profit of 32 million yuan, a year-on-year decrease of 46.60%; 24Q1 achieved revenue of 269 million yuan, an increase of 16.10% over the previous year, and realized net profit of 27 million yuan, a year-on-year decrease of 17.31%.
24Q1 gross margin is under pressure. Expenses are mainly affected by overseas expansion and share payments. The company's overall gross margin in 2023 was 40.89%, down 1.04pcts year-on-year, mainly related to changes in product revenue structure. The gross margin of the 24Q1 company was 38.04%. Our judgment is mainly related to the rise in the price of bulk raw materials. On the cost side, the company's expense ratio for the 23-year period was 26.65%, an increase of 9.25 pcts over the previous year, mainly due to the allocation of share payment expenses to the three sales, R&D, and management projects. In addition, sales and management expenses are also affected by factors such as the company's business scale growth and overseas market expansion. R&D expenses are mainly due to the increase in the company's new product, new process, and new equipment development activities.
New energy vehicles and downstream optical storage have a leading edge. In '23, the company achieved downstream revenue of 596 million yuan of NEV, an increase of 54.66%; the downstream revenue of Fengguang Storage achieved revenue of 345 million yuan, an increase of 23.66% over the previous year, with the two major NEVs accounting for 89% in total. New energy vehicles: In the domestic market, the company's end users have covered mainstream domestic NEV passenger car and commercial vehicle manufacturers, and has cooperated with SAIC Volkswagen, FAW-Volkswagen, etc.; in the international market, the company has entered the supply chain of Tesla, Daimler, etc.; wind and solar storage: The main customers have developed into customers such as Sunshine Power, Ningde Era, Huawei, and Vidi. In the energy storage market, the company can provide protection solutions for different locations, including packs, high-voltage boxes, PCS, etc., to prepare for 2000V energy storage system applications. The fuse is better able to meet safety requirements.
New products are being incubated and are expected to be launched later. Lightning protection market: The company has fully laid out the lightning protection market and launched a special fuse type lightning protection backup protector, which is used in the wind storage and charging industry. The company has carried out in-depth cooperation and joint development of integrated products with leading lightning protection companies. In 2024, the company plans to occupy a larger market share in the lightning protection market; patch products: The company actively lays out the patch market and launches patch products with surface mount technology as the core. The products are relatively small and can cleverly provide reliable overcurrent protection for work units in a limited space. In 2024, the company plans to achieve a major breakthrough in the patch market.
Investment advice: The company is the leader in electric fuses, and the high voltage trend of EVs is expected to increase the value of the company's bicycle products, while the overseas layout is expected to open up new growth space for the company. We expect the company's 2024-2026 revenue to be 15.01/20.62/2,749 billion yuan, respectively, with corresponding growth rates of 41.6%/37.4%/33.3%; net profit to mother is 2.23/3.14/443 million yuan (including equity incentive expenses), respectively. The corresponding growth rates are 90.4%/41.2%/41.0%, respectively, on April 24 The daily closing price is the benchmark, and the corresponding 2024-2026 PE is 26x/18x/13x. Maintain a “Recommended” rating.
Risk warning: risk of increased competition in the industry; risk of policy changes in the NEV industry.