Matters:
The company released a quarterly report, with revenue of 5.7 billion yuan, +27% YoY, +2.5% month-on-month, return to mother 650 million yuan, +43% YoY, and +17% month-on-month.
Commentary:
The quarterly report performed better than expected. The company's 1Q24 revenue was 5.7 billion yuan, +27% year over month, and the month-on-month performance was better than that of major customers. Among them, Tesla Global -12%, Geely -11%, BYD -31%, and the industry -28%, but Quanjie grew from 60,000 vehicles in 4Q to 83,000 vehicles. Topp also benefited from volume and ASP. Net profit attributable to mother was 650 million yuan, +43% YoY, +17% month-on-month, net interest rate 11.4%, YoY +1.2PP, and month-on-month +1.5PP. The year-on-year increase was mainly due to improvements in gross margin and expense ratio. The month-on-month increase was mainly due to significant impairment in 4Q. The gross profit ratio is 22.4%, +0.6PP year over year, and -1.7PP month over month, which is at a normal level; the total cost ratio is 9.5%, -1.0PP year over year, and +0.1PP month-on-month.
The company's stock price performance has continued to be suppressed by T-chain sentiment since this year, but the short-term and long-term excellent undertones remain the same.
Due to the weakness of Tesla's global sales volume and Model Q expectations this year, the company's stock price was also greatly affected. We need to see that although Tesla accounts for a relatively high share of the company's operations, excluding Tesla, the company's short-term operation and medium- to long-term growth logic is still quite excellent:
1. In the short term, benefiting from the double volume and price of domestic high-end trams. We expect domestic sales of new energy passenger vehicles to be 11.18 million units/ +26%. The increase is mainly due to autonomous electric vehicles, and the performance of mid-range and high-end models is also expected to be excellent. These incremental sales are expected to form the source of continued rapid growth in Tuopu's revenue and performance in 2024, including Huawei-Jinkang, Ideal, BYD, Xiaomi, Geely, SAIC Motor, etc., and some projects will receive a larger ASP as the number of supporting product categories increases, further supporting revenue. This type of incremental revenue from non-Tesla is expected to reach close to 7 billion yuan, contributing 35 percentage points to the company's 2024 growth rate.
The company's revenue is expected to reach 26.6 billion yuan/ +35% in 2024, with a performance of 2.81 billion yuan/ +31%.
2. There is still plenty of room and potential for medium- to long-term growth, and it is expected to support the company's valuation premium and return on investment over a long period of time.
First, global growth opens up space for the main automobile business. Along with Tesla, the company's European plant in Poland has been put into operation, and the Mexican plant continues to accelerate planning and construction to meet the mass production needs of important customers, and is expected to use this as a base to further explore new opportunities in the European and American automobile industry. Currently, it has developed comprehensive cooperation with overseas giants or new forces such as Ford, GM, Rivian, and Lucid in the field of new energy.
Second, robot parts open up a new main business space. At present, the company has expanded in the automotive product category. It has eight series of products, and has achieved an ASP of up to 30,000 yuan. In addition to automobiles, relying on the company's existing 1) motor self-development capabilities, 2) system integration capabilities such as motors, reduction mechanisms, controllers, etc., and 3) precision machining capabilities, etc., the company has actively laid out robot-related businesses, including core components such as actuators, etc. The overall ASP is also expected to achieve a high level of overall ASP, and set up a separate robotics division for it to seize historical opportunities for industrial development. In the future, the company is expected to have both automotive and robotics businesses, once again opening up new space for further growth.
Investment advice: After development over the past few years, the market is fully aware of Tuopu's core competitiveness. However, in the short term, due to the slowdown in Tesla's growth rate and uncertain Model Q expectations, etc., the company's stock price performance is weak; on the contrary, it may be a layout opportunity. In the short term, although the market is concerned about the impact of the slowdown in Tesla's growth rate, domestic autonomous new energy sources, especially high-end models, have maintained a high growth rate. Combined with the company's high bicycle supply, it is expected to provide strong support for the company's performance this year. In the medium to long term, global strategic development and focus on robot parts are expected to open up new growth space for the company beyond the growth path of comprehensive domestic parts suppliers, and support the company's future return on investment and current valuation.
Based on the company's quarterly report and industry outlook updates, we adjusted the company's 2024-2025 net profit forecast from 3.14 billion yuan and 3.96 billion yuan to 2.81 billion yuan and 3.39 billion yuan, with year-on-year growth rates of +31% and +21%, and introduced the 2026 forecast of 4.0 billion yuan/ +18%, corresponding to the current PE 25 times, 21 times, and 17 times. Based on the company's valuation level in the past 5 years and the future growth status of the automotive and robotics business, we gave the company a target PE of 30 times for 2024, corresponding to a target price of 72.5 yuan, maintaining a “strong” rating.
Risk warning: Significant downstream incremental customer model sales fall short of expectations, robot industry development progress falls short of expectations, automobile industry sales fall short of expectations, Tesla's new car pace is lower than expected, etc.