Bearing rings and wind power roller bearings drove performance growth. The company's overall development was relatively steady. In 2023, the company achieved operating income of 3.106 billion yuan, -2.95% year on year, and realized net profit of 138 million yuan, -6.49% year on year; 2024Q1 achieved revenue of 773 million yuan, -4.60% year over year, and realized net profit of 38 million yuan, or -5.84% year on year. The company's bearing ring revenue has declined due to geopolitics and energy prices, and 2023Q4 has improved; wind power roller bearings are affected by insufficient downstream demand, and revenue falls short of expectations. The company's finished bearings and other products have continued to grow, and the auto parts and thermal management system parts business has remained steady. We have lowered the company's profit forecast for 2024-2025 and added a profit forecast for 2026. The company's net profit for 2024-2026 is 1.95/2.39/299 billion yuan (value 2.221/279 million yuan before 2024-2025), EPS is 0.53/0.65/0.81 yuan, and the PE corresponding to the current stock price is 43.4/35.3/28.2 times, maintaining the “purchase” ” Ratings.

The company's profit margin remains stable, and overall expenses are steady

The company's gross margin is relatively stable: in 2023, the company's gross margin was 17.54%, -0.24pct, of which the gross profit margin of the bearing business was 18.01%, the gross profit margin of the auto parts business was 19.66%, +1.19pct year on year, and the gross profit margin of the thermal management system parts business was 12.66%, +0.02pct year on year. The overall cost ratio of the company declined in 2023. Sales/management/finance/R&D expenses were 2.70%/4.77%/0.48%/3.26%, respectively, +0.57pct/-1.14pct/-0.23pct/0.08pct, respectively. The increase in sales margin was due to increased wages in FLT Poland.

The company is actively developing screw products. The three types of screw products have formed production capacity and achieved revenue. The company is focusing on the application prospects of bearings and screws in the robot industry, and is speeding up investment in R&D and production. Currently, the company has successfully developed a full range of robot bearing products to support robot reducer companies such as Nangao Gear, and also has independent design and positive development capabilities for screws. The company's screw products cover the three types of trapezoidal screws, ball screws and planetary roller screws: (1) trapezoidal screw components are being sent to key customers; (2) ball screw nut units have been used in new energy vehicle steering systems, electronic braking and parking systems; (3) planetary roller screws are difficult to design and produce, and the localization rate is low. Samples of the company's planetary roller screws have been shipped and generated a small amount of revenue.

Risk warning: The boom in the wind power and bearing industry is declining, and the robot business is progressing less than expected.