The company's net profit to mother increased 27% year-on-year in 24Q1
Daimei Co., Ltd. released its annual report. In 2023, it achieved revenue of 5.861 billion yuan (yoy +13.90%), net profit to mother of 654 million yuan (yoy +14.77%), deducting non-net profit of 679 million yuan (yoy +25.98%). 24Q1 achieved revenue of 1,589 million yuan (yoy +15.83%, qoq +9.39%) and net profit to mother of 195 million yuan (yoy +26.85%, qoq +69.95%). We expect the company's net profit to be 8.9/10.8/1.28 billion yuan respectively in 24-26. Comparable with Wind's 24-year average PE average expectation of 26.2 times, giving the company 26.2 times PE in 24 years, with a target price of 18.34 yuan (previous value of 18.33 yuan), maintaining the “buy” rating.
The volume of ceiling products is expected to become the core growth engine
On the revenue side, the company's revenue increased 13.9% year-on-year in '23. By business: 1) The company's fist product visor had revenue of +5.6% YoY to 3.86 billion yuan, with an average unit price of +4.7%; 2) Headrest project volume, revenue +29.2% YoY to 1,005 billion yuan, average unit price +5.8% YoY; 3) In ceiling systems, controller product revenue was +21.2% to 5.0 billion yuan. Mass production and implementation of integrated ceiling and system products achieved an average operating revenue of 230 million yuan.. The company has expanded from single interior parts such as sun visors to integrated ceiling systems, and the supporting value has been greatly upgraded, which is expected to become the core driving force for the company's performance growth. The 24Q1 company's revenue was +15.8%/9.4% year-on-month to 1.59 billion yuan, or the ceiling capacity continued to be released and overseas demand was steady.
24Q1 gross margin improved significantly year over year
The company's gross margin in '23 was +4.21pct to 27.3% year over year, and 24Q1 gross margin was +0.33/+3.72pct to 27.85%, respectively. Profitability improvements may be driven by scale effects of declining production capacity and changes in product structure. The company continued to promote lean management and optimized cost control during the period. The sales/management/R&D expense rates for 23 years were 1.73%/6.41%/3.92%, respectively, -0.23/-0.20/-0.11pct. The 24Q1 company's sales rate was -0.13pct to 1.64% (23Q4 sales rate was negative); management and R&D rates were +0.2/1.8pct, -0.6/-0.9pct to 6.7% and 3.1%, respectively; financial rates were -1.7/-1.5pct to 1.1% month-on-month, or affected by exchange rate fluctuations.
The global strategy took the lead. The expansion of Mexican production capacity lays the foundation for growth. Products such as sunshades and headrests covered leading overseas car companies including GM, Ford, Volkswagen, and Stellantis. Overseas revenue in '23 was +17.6% to 4.95 billion yuan, and with product structure upgrades and production capacity climbing, gross margin was +5.3 pct to 27.5% year over year. In addition, the company is taking advantage of the North American customer expansion opportunity to expand production capacity in Mexico, and plans to add 300,000 sets of integrated automotive roof systems/600,000 sets of roof products. We are optimistic that after the production capacity construction is completed, the company will use the customer resource advantages accumulated in traditional business to introduce roof products to more global car companies, and achieve further growth in overseas business.
Risk warning: The implementation of the robotics business is slower than expected; the progress of overseas supporting projects falls short of expectations.