The company's logic of expanding the new energy business was gradually implemented, profits returned to a rapid growth trajectory, traditional business advantages were stable, digital energy business breakthroughs were accelerated, and the “Highly Recommended” investment rating was maintained.
Incident: The company released its 2023 annual report and 2024 quarterly report, and achieved operating income of 3.251 billion yuan, YoY +43.50%; realized net profit of 179 million yuan, YoY +75.66%; realized net profit withheld from non-mother of 367 million yuan, YoY +262.50%; net operating cash flow of 434 million yuan, YoY +213.34%. 23Q4 achieved revenue of 1,062 million yuan in a single quarter, YoY +47.14%; realized net profit of -87 million yuan, compared with -0.002 billion yuan in the same period last year; realized net profit without deduction of 99 million yuan, YoY +431.89%. In a single quarter, 24Q1 achieved operating income of 863 million yuan, YoY +22.22%; realized net profit of 125 million yuan, YoY +73.34%; realized net profit of 125 million yuan and YoY +70.65%. The company's profit returned to a rapid growth trajectory, and revenue reached a record high in 23 years.
The new energy business is gaining momentum, and the traditional business is growing steadily. Since the company announced its new energy strategy on September 25, 2021, while stabilizing the leading edge and profitability of the traditional automobile diagnosis business, the company's new energy charging pile achieved revenue of 567 million yuan (YoY +493.21%) in 23, and 24Q1's digital energy business achieved revenue of 160 million yuan (YoY +103.33%). The new energy business momentum is strong, and the logic continues to be fulfilled. In terms of products throughout the year 23, the company's new energy charging piles/ADAS products/diagnostics and other products/TPMS products/software upgrade services achieved year-on-year revenue growth of 493.21%/75.34%/16.51%/29.25%/18.97%. Among them, the explosive growth of new energy charging piles was mainly due to the increase in AC charging pile sales and the launch of new DC charging piles in the current period; by region, the company achieved a 62.54%/27.51% year-on-year increase in revenue in the North American market/European market/other overseas regions /47.14%
Earnings returned to a rapid growth trajectory. The total non-recurring profit and loss of the company in '23 was -188 million yuan. The main reason was that the company reached a settlement of related lawsuits, paid 221 million yuan in settlement, and the lawsuit settled. We expect the company to return to a rapid growth trajectory later. The company's gross margin declined due to the volume of the charging pile business, and the company's three-fee rate fell year-on-year under lean operation management. The company's gross margin for the full year of '23 was 54.89% (-2.12pct), with sales/management/R&D expense ratios of 15.01%/8.71%/16.46%, year-on-year change of -1.30/ -0.46/ -8.32pct; 24Q1 company gross margin was 56.72% (-1.66pct), and sales/management/R&D expenses ratio changed -2.50/0.42/-1.20pct year on year.
Digital energy lays out new products, and customers in the global market accelerate breakthroughs. In terms of new products, in '23, the company released three important products: DC HiPower, DC Compact for small DC piles, and ACUltra for commercial AC piles. In the future, it will launch megawatt charging piles (MCS), bidirectional charging/discharging charging piles (V2X), and full-scenario overall solutions supporting integrated optical storage and charging and intelligent energy management. In terms of customer development, the company has reached cooperation with CharIN and leading industry companies such as Caterpillar and Monta to sign many of the world's top 50 largest enterprise customers in the North American market, sign a number of major regional customers in the European market, and establish strategic partnerships with many internationally renowned energy companies.
Maintain a “Highly Recommended” investment rating. The company's new energy business is gaining momentum, and its traditional business is growing steadily. The net profit from 24-26 is estimated to be 469/6.26/780 million yuan, maintaining a “highly recommended” investment rating.
Risk warning: New product development falls short of expectations, overseas demand falls short of expectations, and industry competition intensifies.