Recently, the company released its 2023 annual report and 2024 quarterly report: in 2023, the company achieved revenue of 58,330.36 million yuan, a year-on-year increase of 10.72%, achieving net profit of 18.38%; in the first quarter of 2024, the company achieved revenue of 141.8837 million yuan, an increase of 7.60% year-on-year, and achieved net profit of 48.5615 million yuan, a year-on-year increase of 1.22%. The reviews are as follows:
The quality of operations is steady. As mentioned above, the company's revenue side maintained steady growth in 2023 and 2024. The company's revenue growth was due to: 1) Significant increase in sales of major products. According to the company's 2023 annual report, the company achieved sales volume of 98.4494 million pieces of valve transmission parts, an increase of 29.88% over the previous year. 2) Overseas business increased markedly. The company's overseas revenue in 2023 was 198.555 million yuan, an increase of 34.84% over the previous year. Among them, New Coordinates Europe achieved revenue of 93.2692 million yuan, an increase of 45.2% year on year; Mexico New Coordinates achieved revenue of 34.3873 million yuan in 2023, an increase of 93.1% year on year. 3) Huzhou New Coordinate's business improved. In 2023, Huzhou New Coordinates's external revenue was 33.6666 million yuan, an increase of 104% over the previous year.
Gross margin fell slightly in 2023 compared to 2022, and 2024Q1 increased month-on-month in 2023Q4. The company's consolidated gross margin was 53.34% in 2023, slightly lower than 54.74% in 2022. By product, the gross margin of the valve transmission precision parts business in 2023 was 56.21%, up 3.12 pcts from 2022. The gross margin of the valve set precision parts business was 68.29% in 2023, an increase of 1.51 pct. The gross margin of other businesses (transmission parts, automobile chassis parts, product development revenue, etc., and cold forged wire processing) declined a lot. It was 18.53% in 2023, a decrease of 29.24 pct. This business is the main reason for the slight decline in the company's overall gross margin.
2024Q1's consolidated gross margin was 51.51%, up from 2023Q4 (49.38%). We believe that the company's strong competitive strength in the field of precision cold forging parts for valve sets is an important guarantee for the company to maintain a stable gross margin, etc.
Stable dividends and cash reserves. According to the company's 2023 annual report, on April 25, 2024, the company passed the “Proposal on the Company's 2023 Profit Distribution Plan and 2024 Mid-Term Cash Dividend Plan”, which plans to distribute a cash dividend of 4.00 yuan (tax included) to all shareholders for every 10 shares. The cash dividend amount accounts for 40.01% of the mother's net profit. In the 2023 company balance sheet, monetary capital+transactional financial assets totaled $415 million, and 2024Q1 was 445 million yuan. Time deposits in other current assets, non-current assets and other non-current assets due in 2023 totaled about $213 million. At the end of 2023, the company's assets and liabilities showed a total of about 628 million yuan in gold assets, with solid cash reserves.
New products continue to advance. Relying on the company's technical and management advantages in cold forming technology, mold design, automated equipment transformation, etc., we are continuously expanding the application fields of cold forming technology. The types of raw materials have broadened, from mainly steel to aluminum, copper, titanium alloys, etc. In the field of new products, the company is actively expanding the extended application of precision cold forgings in automotive heat pump systems and integrated thermal management modules, electric drive transmission systems, power battery system housings, and parking ball screws. We believe that the cold forging process has the advantages of high utilization rate of raw materials, low cost and high efficiency, and the company's new product expansion can be expected.
Company profit forecast and investment rating: The company's main business will still benefit from overseas markets and the commercial vehicle market to maintain steady growth, and new product expansion can be expected. We are still optimistic about the future development of the company. We expect the company's net profit for 2024-2026 to be 2.10, 2.39, and 272 million yuan, respectively, with corresponding EPS of 1.55, 1.77 and 2.01 yuan, respectively, and PE values of 14, 12, and 10 times, respectively, maintaining the “recommended” rating.
Risk warning: The development of the automotive industry falls short of expectations, and the company's new product expansion falls short of expectations.