Introduction to this report:
The company's profit for Q1 2024 exceeded expectations, mainly due to customer growth and raw materials. The company's performance is expected to grow rapidly in the future as the scale effect increases due to customer growth and the decline in raw material prices compared to 2023.
Key points of investment:
The target price was maintained at $32.71, and the increase in holdings rating was maintained. The company's Q1 profit exceeded expectations in 2024/2025/2026, maintaining the company's 2024/2025/2026 EPS of 1.49/1.84/2.21 yuan. The company was given 22 times PE in 2024, which is comparable to the average of comparable companies, maintaining the target price of 32.71 yuan.
2024 Q1 profit beat expectations. The company achieved revenue of 490 million yuan in 2024Q1, +16.0% year on year, and realized net profit of 77 million yuan to mother, +103.54% year over year. Among them, the net profit returned to the mother exceeded the 66.5 million yuan to 76 million yuan in the company's first quarter earnings pre-announcement.
Profits exceeded expectations, in addition to the contribution of gross profit growth, to a sharp decline in credit impairment losses due to a year-on-year decrease in accounts receivable balances.
Customer growth has led to increased scale effects, while benefiting from lower raw material prices. On the customer side, the company's overall profitability improved with the release of the company's major customers such as SAIC passenger cars, Tesla, and Ideal models, and the stable performance of the subsidiary Wuxi Kaixiang Electroplating business.
In terms of raw materials, the price of the main raw materials used by the company dropped significantly year-on-year in Q1 2024, and the profit of the company's stamping parts business improved.
Benefiting from the high growth of new energy customers and overseas customers, future performance is expected to grow further. High-growth NEV companies such as Xiaomi Auto and Ideal Auto are important customers of the company. The release of new models in 2024 will bring a significant increase in performance to the company's stamped parts business; the company's largest customer, SAIC Motor, is booming overseas, and the company's split assembly business is expected to maintain high growth. Furthermore, the company's electroplating business continues to perform steadily, while expanding applications in new fields, which is expected to bring further growth in the future.
Risk warning: risk of declining sales of major customers; risk of rising raw material prices, etc.