Global leader in the field of micromotors, stable performance in 24Q1

The company released its 2024 quarterly report. In Q1 of '24, it achieved operating income of 722 million yuan, +2.46%/-13.08%; net profit to mother of 73 million yuan, +1.85%/+12.19% YoY; net profit excluding non-return to mother of 77 million yuan, +29.50%/+219.16% YoY, with a steady overall growth rate. We maintain the 24-26 EPS forecast of 1.19/1.38/1.56 yuan, respectively. Comparable to the company's 24-year average PE of 22.6 times. Considering the company's leading position in the micromotor industry and continuing to expand applications in emerging downstream markets, the company was given 26 times PE in 24 years, maintained a target price of 30.85 yuan (previous value of 28.48 yuan), and maintained a “gain” rating.

Product structure continued to be optimized, 24Q1 gross margin increased month-on-month

The company is positioned as an expert in motor drive system solutions and actively participates in the simultaneous development of new products for customers. The company achieved revenue of 722 million yuan in Q1 in '24, +2.46%/-13.08% YoY.

The gross profit margin was 29.86%/10.43% in Q1 in '24, with a month-on-month change of +3.01/+1.44pct. Sales/management/R&D/finance expense ratios for Q1 in '24 were 3.35%/10.58%/4.75%/-1.48%, respectively, with a month-on-month change of +0.18/+2.57/+0.25/ -0.99pct. The cash flow performance was impressive. Net cash flow from operating activities in Q1 '24 was 125 million yuan, +256.87% year over year.

Seize opportunities in emerging markets and increase the share of high-value-added products. According to the 23rd annual report, in terms of new products, 1) in the field of new energy vehicles, automotive lidar motors and electric air conditioning compressor controllers have already entered the mass production stage, and automotive electric air conditioning actuators and active safety motors have already entered the sample testing stage. 2) In the field of household appliances, the brushless motor for the new product air conditioner has entered mass production, the complete ice making system for refrigerators has entered the small-batch production stage, and the brushless motor for commercial central air conditioning is in the customer prototype testing stage. 3) In the medical field, voice coil motors for ventilators are in mass production. 4) In the field of industrial control, projects such as planetary balls and roller screws are in the sample testing and customer certification stage.

Shifting to intelligent manufacturing, automated production lines continue to enable cost reduction

With the advancement of the company's intelligent manufacturing strategic plan, the company has continuously increased R&D and investment in automation equipment, and carried out a series of intelligent upgrades to product manufacturing and production technology. By the end of '23, the production automation rate of the company's components had exceeded 80%, and there were 35 automated production lines. The automated production and operation capacity continued to improve steadily. On the one hand, it is conducive to reducing production costs, and on the other hand, it will provide solid technical support and fast standard delivery guarantee for high-end manufacturing and modular products. In addition, the company is also actively participating in overseas layouts, and the Mexican plant is currently under construction.

Risk warning: risk of raw material price fluctuations, R&D innovation falling short of expectations, risk of exchange rate fluctuations.