Incident: The company released its 2023 annual report and 2024 quarterly report. In 2023, it achieved revenue of 1.11 billion yuan, an increase of 3.2% year on year; net profit to mother was 240 million yuan, an increase of 137.4% year on year. With 2024Q1, the company achieved revenue of 280 million yuan, up 6.9% year on year; net profit to mother was 52 million yuan, up 1.3% year on year.
In 2023, orders from the automotive industry were good, total revenue remained steady, and gross margin increased markedly. In 2023, the company made great progress in the automotive industry and had many designated customers. The construction machinery industry remained relatively stable, and total revenue grew steadily by 3.2%. The company's comprehensive gross margin in 2023 was 35.8%, an increase of 6.4 percentage points over the previous year, mainly due to factors such as low raw material prices and product price adjustments. 2024Q1, the company's comprehensive gross margin was 34.3%, a decrease of 3.2 percentage points over the previous year, mainly due to a decrease in delivery of high-margin nuclear power orders.
The fee rate remained stable during 2023, and the net interest rate increased significantly. The company's expense ratio for the 2023 period was 11.0%, a year-on-year decrease of 0.2 percentage points; for 2024Q1, the rate for the period was 11.9%, a decrease of 2.3 percentage points year-on-year. In 2023, the company's net interest rate was 21.9%, up 12.4 percentage points year on year. The main increase in gross margin and profit and loss from changes in fair value changed year on year; 2024Q1, the company's net interest rate was 19.2%, a decrease of 0.6 percentage points year on year.
The company is a leading domestic self-lubricating bearing company, and applications in many fields open up room for growth. According to data from the Huajing Industry Research Institute, the global bearing market size in 2022 is about US$13.2 billion, equivalent to over RMB 900 billion. As an emerging product, self-lubricating bearings have an alternative effect on rolling bearings, and there is plenty of potential room for growth. The company is a leading domestic self-lubricating bearing company. Currently, its downstream customers are leading automobile and construction machinery companies. It maintains stable cooperative relationships with leading customers in Caterpillar, Sany Heavy Industries, Hyundai, Volvo and other industries. As the number of designated automobile customers continues to increase and the construction machinery industry gradually comes out of a downward period, the business in this field will grow steadily.
The wind power industry chain is under high pressure to reduce costs, and there is great potential for sliding bearings to replace rolling bearings. The company has cooperated with Goldwind Technology and Shanghai Electric to develop and verify sliding bearing solutions. If progress goes well, wind power bearings will become the company's second growth curve. Furthermore, the company develops screw products through joint ventures, and has great potential for development in the fields of automobiles, machine tools, and robots.
Profit forecasting and investment advice. The company's net profit for 2024-2026 is estimated to be RMB 2.8, 3.4, and 410 million yuan respectively. The compound net profit growth rate for the next three years will be 19%, maintaining a “buy” rating.
Risk warning: risk of macroeconomic fluctuations, risk of automobile industry orders falling short of expectations, risk of raw material price fluctuations.