Core views:

The company's 24Q1 revenue and net profit before and after deduction were -7.7%, +32.4%, and +54.3%, respectively. The company released its 2024 quarterly report, achieving revenue of 2.90 billion yuan, -7.7% year-on-year, and +5.5% month-on-month; net profit before and after deduction of 550 million yuan and 550 million yuan, respectively, +32.4% and +54.3% year-on-year, respectively, +6.6% and 36.9% month-on-month, respectively. According to the first quarterly report, the 24Q1 company's revenue decline was mainly due to: (1) the year-on-year decline in the price of precious metal raw materials used in post-processing system products; (2) the OEM optimized the precious metal plan and the use of precious metals decreased, leading to a decrease in unit sales prices. In addition, other revenue for 24Q1 was 80 million yuan, an increase of 60 million yuan over the previous year, mainly due to the VAT deduction policy. The 24Q1 asset disposal revenue was 255,000 yuan, a year-on-year decrease of 60 million yuan, mainly due to the high base due to the demolition proceeds of the subsidiary Weifu Jinning in the same period last year.

The company's 24Q1 gross profit margin and net profit margin improved significantly year-on-year. The company's gross profit margin and net profit margin were 18.5% and 19.8% respectively in 24Q1, +4.1pct and +6.3pct, respectively, and -2.9pct and +0.1pct month-on-month, respectively. The company's sales, management, R&D, and financial expense ratios of 24Q1 were +0.7pct, +1.4pct, -0.8pct, and -0.8pct, respectively, -0.2pct, -1.8pct, and +0.3pct month-on-month, respectively.

The company's own capital is still abundant and the financial situation is good. At the end of 24Q1, the company's monetary capitals+bills receivable financing+other current assets+transactional financial assets totaled 6.40 billion yuan, or -17.2% year-on-year, but it is still quite abundant. At the same time, the company's balance ratio at the end of 24Q1 was 26.5%, interest-bearing debt/total invested capital was 4.1%, and the long-term capital debt ratio was only 3.5%.

Profit forecast and investment advice: The truck industry is in the early stages of the upward cycle. The company's product barriers are high, the operation is steady, and the stability of profits and dividends can be expected. We expect the company's 24-26 EPS to be 2.08/2.31/2.53 yuan/share, respectively, and the current stock price corresponding PE is 8.94/8.06/7.33 times, respectively. Combining the company's historical valuation and the recent PE valuation center of international parts companies, we gave the company 13 times PE in 24 years, a reasonable value of 27.01 yuan/share, maintaining a “buy” rating.

Risk warning: The epidemic is repeated, the macroeconomy falls short of expectations, and the downstream boom is lower than expected.