Event: The company released its 2023 Annual Report & 2024 Quarterly Report, and its business performance grew steadily. On April 29, 2024, Daimei Co., Ltd. released its 2023 Annual Report & 2024 Quarterly Report. In 2023, the company achieved operating income of 5.86 billion yuan, +14% year on year, realized net profit of 650 million yuan, and realized net profit of 680 million yuan, +26% year over year; 2024Q1 achieved operating income of 1.59 billion yuan, +16% year over year, realized net profit of 200 million yuan, +27% year over year, and achieved net profit of 210 million yuan without return to mother, +49% year over year. The main reason for the increase in revenue was the increase in orders for new projects.
Profitability has been steadily increasing, and interior product business continues to improve. In 2023, the company achieved a comprehensive gross profit margin of 27.3%, a net profit margin of 11.2%, and a net profit margin of 11.2%, and +0.1 pct; 2024Q1 achieved a comprehensive gross profit margin of 27.9%, +0.3 pct year on year, and a net profit margin of 12.3% and +1.0 pct year on year. In 2023, the sunvisor/headrest/ceiling central controller/ceiling and ceiling system integrated products achieved operating revenue of 38.6/10.1/5.0 billion, +6/ +29%/+21% year over year, achieving gross profit margin of 27.5%/32.6%/17.2%/26.2%, and +4.4/+3.5/+3.1 pct year over year.
Customers are of high quality and stability, and the global layout has been further improved. As a leader in the automotive interior segment, the company has established supporting supply relationships with mainstream automakers around the world. The products are exported to overseas markets such as North America, Europe, Asia Pacific, etc., and has built a global marketing and service network covering 18 countries. It supports supply with international customers such as Bentley, Mercedes-Benz, BMW, Audi, etc., and domestic customers such as SAIC GM, FAW-Volkswagen, Great Wall, and BYD, and has stable cooperative relationships. At the same time, seize opportunities in the NEV industry, promote the expansion of products from individual automotive interior products such as sun visors to large-scale products with roof system integration, and expand the roof system business in the North American market as the core to domestic and European markets, which will help further improve the company's business performance in the future.
Convertible bonds are being raised for interior projects, and the roof business can be expected to increase. In 2023, the company issued 908 million convertible bonds for the construction project of 700,000 sets of roof products per year and the construction project of the Mexican automotive interior parts industry base. The production capacity is mainly for integrated roof system products and roof products for new energy vehicles, mainly for new energy vehicles, all of which have obtained project targets from world-renowned car companies. After the project is put into operation, the company's products and production layout will be further improved to effectively improve the company's operating performance. The main reason is that the bicycle value and gross margin of products related to car ceilings are higher than traditional interior parts, and the increase in production capacity will raise the current level of gross margin and net interest rate.
Profit forecast and investment advice: The company's revenue for 2024-2026 is expected to be 75.26 billion yuan, 89.11 billion yuan, and 10.247 billion yuan, respectively, and the corresponding net profit to mother is 951, 11.11, and 1,287 million yuan, respectively. Based on the closing price of 12.78 yuan on April 30, 2024, the corresponding PE was 17.08, 14.62, and 12.63 times, respectively, maintaining the “buy” rating.
Risk warning: risk of cyclical fluctuations in the automotive industry, tariff and exchange rate risks, progress in the company's production capacity construction falls short of expectations, and the company's project expansion falls short of expectations.