Incidents:
On April 26, 2024, GM released its 2023 annual report and first quarter report: achieved operating income of 5,064 billion yuan in 2023, up 22.91% year on year; realized net profit of 216 million yuan, up 119 million yuan year on year; realized net profit withheld from mother was 196 million yuan, up 203 million yuan year on year; gross sales margin was 15.74%, up 5.19 pcts year on year; net sales profit margin was 4.27%, up 3.91 pct year on year; net cash flow from operating activities was 892 million yuan, year on year. An increase of 723 million yuan.
In the 2023Q4 quarter, the company achieved operating income of 1,385 million yuan, +63.60% year over month, and -3.74% month on month; realized net profit of 58 million yuan, +63.61 million yuan year on year, 42.79 million yuan month on month; net profit after deduction of 57 million yuan, +74.61 million yuan year on year, 19.36 million yuan month on month; net cash flow from operating activities was 198 million yuan, year on year 6.05 million yuan, month on month 96.54 million yuan. Gross sales margin was 20.59%, +9.67 pct year on year, +4.66 pct month on month; net sales margin was 4.17%, +4.89pct year on year, -2.83 pct month on month.
At the same time, the company announced its first quarter report. In a single quarter of 2024Q1, the company achieved operating income of 1,443 million yuan, +37.58% month on month; realized net profit of 153 million yuan, +142 million yuan year on year, +95 million yuan month on month; net profit after deducted from mother was 149 million yuan, +148 million yuan year on month, +92 million yuan month on month; net cash flow from operating activities was 263 million yuan, year on year +289 million yuan, month on month. Gross sales margin was 18.05%, +7.55pct year on year, -2.54 pct month on month; net sales margin was 10.59%, +9.52pct year on year, +6.42pct month on month.
Investment highlights:
Revenue and profit increased year-on-year in 2023, and production and sales increased year-on-year to achieve operating income of 5,064 billion yuan in 2023, up 22.91% year on year; realized net profit of 216 million yuan, up 199 million yuan year on year. Among them, in 2023, the company achieved gross profit of 797 million yuan, a year-on-year increase of 363 million yuan; period expenses of 499 million yuan, a year-on-year increase of +68 million yuan, credit impairment losses of 50.67 million yuan, a year-on-year decrease of 33.9 million yuan, asset impairment losses - 65.51 million yuan, and a year-on-year decrease of 51.08 million yuan. Cash flow from the company's operating activities in 2023 was 892 million yuan, +723 million yuan year-on-year. In terms of period expenses, the company's sales expenses in 2023 were 3.02%, +0.24pct year on year; management expenses were 3.34%, -0.20pct year on year; R&D expenses were 1.43%, -0.80pct year on year; financial expenses were 2.07%, +0.16pct year on year, respectively.
In terms of tire production and sales, in 2023, the company achieved production volume of 11.976 million tires, +39.13% year over year; achieved sales volume of 11.8605 million tires, +38.90% year over year; tire business achieved revenue of 5,028 billion yuan, +26.77% year over year; realized gross profit of 786 million yuan, +102.23% year over year; and tire business gross profit margin of 15.64%, +5.83 pct year on year.
In 2023, Q4 achieved net profit of 57.74 million yuan, a decrease of 42.94 million yuan, a year-on-month increase of 55.99 million yuan, a month-on-month increase of 55.99 million yuan, a year-on-month increase of 90.96 million yuan, investment income of 3.15 million yuan, a month-on-month decrease of 2.52 million yuan, income tax expenses of 513,000 yuan, and an increase of 6.57 million yuan over the previous month.
2024Q1 performance increased, and many expense rates declined
According to the company's first quarter results report, 2024Q1 achieved net profit of 153 million yuan, an increase of 95.11 million yuan over the previous month. The increase in profit was mainly due to increased sales. 2024Q1 tires sold 3.748 million tires, +27.49% month over month. 2024Q1 achieved gross profit of 261 million yuan, a decrease of 24.65 million yuan. In terms of expenses, 2024Q1 sales expenses were 32.63 million yuan, a decrease of 15.91 million yuan; management expenses were 61.13 million yuan, an increase of 13.34 million yuan; R&D expenses were 13.31 million yuan, a decrease of 11.05 million yuan; and financial expenses were -1.89 million yuan, a decrease of 65.96 million yuan. Credit impairment losses in 2024Q1 were 5.41 million yuan, an increase of 26.38 million yuan over the previous month.
Cambodia's Phase I production capacity is climbing. Thailand Phase II and Cambodia Phase II are successfully advancing Cambodia's Phase I production capacity and is expected to be completed in June 2024. Currently, Thailand's Phase II is building 6 million semi-steel tires and 500,000 all-steel tires, and Cambodia Phase II is under construction of 3.5 million semi-steel tires and 750,000 all-steel tires. Both projects are expected to be completed in 2025, and we are optimistic about the increase brought about by the construction of the new project.
Profit forecasts and investment ratings estimate that the company's 2024-2026 revenue will be 68.30, 96.36 billion yuan, and 11.309 billion yuan, and net profit to mother will be 7.00, 10.34, and 1,346 billion yuan respectively, corresponding to PE 14, 9, and 7 times, respectively. Considering the company's future growth, it will maintain a “buy” rating.
Risks suggest that the progress of new production capacity construction falls short of expectations, the contribution performance of new production capacity falls short of expectations, fluctuations in raw material prices, changes in environmental protection policies, and a sharp decline in the economy.