Core views:
The company performed well in Q1 '24. According to financial reports, the company achieved operating income of 1.86 billion yuan in 24Q1, +24.0%/-21.5% year-on-month, and realized net profit of 210 million yuan, +21.9%/-29.2% year-on-month, after deducting net profit of 190 million yuan without return to mother, +18.6%/-38.8% year-on-year. By product, the company's 24Q1 intelligent electronic control products/disc brakes/lightweight brake components/mechanical steering sales were +27.9%/+12.9%/+52.1%/+54.0% year-on-year, respectively.
The profit level is stable, and the cost control is excellent. According to financial reports, the company's Q1 gross profit margin, net profit margin, and period expense ratio were 20.7%/11.3%/8.8%, respectively, -0.7 pct/-0.4 pct/-0.8 pct year-on-year, and -2.3 pct/-1.2pct/+0.2pct. Among them, sales/management/R&D/finance expenses were 1.0%/2.5%/6.0%/-0.7%, respectively, -0.0pct/-0.1pct/-0.2 pct/-0.5pct, year-on-year, and -0.2pct/-0.2pct, respectively.
Overseas customers continue to break through, and there are plenty of orders in hand. According to the quarterly report, in 24Q1, the company received orders for lightweighting (full life cycle of US$122 million) and EPB (full life cycle of US$600 million) from American and German customers respectively, and overseas customer expansion performance was outstanding. In Q1, the company had 208/22/46 disc brakes under development/new mass production/new fixed-point projects; 49/11/9 items for lightweight products; 164/16/38 new mass-production/new fixed-point projects for electronic control products were 164/16/38, of which linear control under development/new mass production/new designated projects were 82/5/22; the 24Q1 company's ongoing research projects, new mass production projects, and new fixed-point projects were still outstanding, with plenty of orders in progress..
Profit forecast and investment advice: The company is a leader in the rapidly advancing domestic braking sector. Overseas business expansion and the gradual establishment of a global chassis supply capacity may open up new growth space for it. In the short to medium term, it has benefited from significant increases in the contribution of EPB, line control, and domestic substitution in the shift business, and is optimistic about overseas business expansion and global chassis supply potential in the long term. We expect the company's 24-26 EPS to be 2.69/3.54/4.66 yuan/share, respectively. Combined with historical valuations and comparable valuations, the company will be given a 24-year 30-fold PE valuation, corresponding to a reasonable value of 80.81 yuan/share, maintaining a “buy” rating.
Risk warning: Competition in the industry intensifies, customer expansion falls short of expectations, technology upgrades fall short of expectations, etc.