Incident: The company released its 2024 quarterly report: 24Q1 achieved revenue of 1,766 billion yuan, yoy +7.32%; net profit to mother of 400 million yuan, yoy +28.70%; gross profit margin 35.49%, +4.43pct year on year; net profit margin 22.70%, yoy +3.82pct year on year. The company's revenue was in line with expectations, and the performance exceeded market expectations.
Comment:
Revenue maintained steady growth, up 7.32% year over year in 24Q1. By business: 1) Tire mold: Domestic tire factories are rapidly expanding overseas production capacity, and the company's export business contribution is increasing. The second phase of the Thai project was put into operation in October 23, and the Mexican plant is expected to be put into operation this year; 2) Wind power castings: According to the National Energy Administration data, the installed capacity of wind power generation in January-March was 15.5GW, an increase of 49% over the previous year. Since March, China's offshore wind power projects have continued to be promoted intensively. Construction is ready to begin. After being removed from inventory in the second half of '23, 24Q1's wind power casting orders have resumed.
24Q1 net profit margin 22.70%, +3.82pct year over year. Reasons for the continued increase in profitability: 1) Changes in the business structure, and the growth rate of the high-margin mold business is higher than that of the large-scale parts business; 2) technological transformation (upgrading of automated production lines). The increase in profits brought about by technical reform is continuous; 3) Increased exchange earnings have led to a decrease in financial expenses.
The company increased its R&D and sales efforts, and the comprehensive cost ratio increased slightly. According to the company's annual report, the 24Q1 comprehensive cost rate was 9.97%, up 0.18pct from 23Q1, of which: 1) R&D expense ratio: increased from 4.59% in 23Q1 to 5.47%; 2) Sales expenses rate: increased from 1.33% in 23Q1 to 1.48%; 3) Management expenses rate: increased from 2.81% to 3.28% in 23Q1; 4) Financial expenses rate: decreased from 1.05% in 23Q1 to -0.26%.
The machine tool business continues to expand benchmark customers. According to the company's official website, the company unveiled five high-end products at the China CNC Machine Tool Exhibition: horizontal five-axis turning and milling composite machining center, horizontal five-axis machining center, vertical five-axis turning and milling composite machining center, and five-axis blade machining center. Among them, the first two machine tools won the “Chunyan Award” issued by the China Machine Tool Association, and only two “Chunyan Awards” were awarded by the China Machine Tool Association.
The profit forecast was raised and the buying rating was maintained. Since the company's overseas demand for the tire mold business exceeded expectations, the 24-25 profit forecast was raised and the 26-year profit forecast was added. The expected 24-26 results were 19.25, 23.05, and 2,683 billion yuan respectively (1,841 billion yuan and 2,213 billion yuan in the previous 24-25 years), and the company's current stock price corresponding to 24-26 PE is 17X, 14X, and 12X, respectively. We believe that the proportion of unrelated customers in the company's 5-axis CNC machine tool business increased significantly in '23, was recognized by downstream customers, and is expected to officially enter the expansion period in '24. Therefore, the buy rating is maintained.
Risk warning: the risk of a sharp rise in raw material prices; the risk of export trade being blocked, etc.