Maintain an increase in holdings rating and maintain the target price of $20.60. Maintain the 2024-2025 EPS forecast of 0.13/0.35 yuan, add the 2026 EPS forecast of 0.44 yuan, maintain the target price of 20.60 yuan, corresponding to 0.87 times PS in 2024, and maintain the holdings increase rating.
The annual report was in line with expectations. Net profit to mother turned a loss into a profit, deducted non-loss narrowed, and the transition was accelerated by going light. The company's revenue in 2023 was 45 billion yuan, up 23.1%. Net profit due to mother was 150 million yuan, turning a loss into a profit compared to the previous year; loss after deducting non-return to mother was 1.72 billion yuan, which is a sharp decrease from the previous year's loss.
The company's 4Q23 revenue was 11 billion yuan, up 23% from the same period. Net profit attributable to mother was 0.3 billion yuan, net profit deducted from non-mother was 1.2 billion yuan. Losses improved markedly from the previous year. The company estimated a loss of 1.1 billion yuan in value in 2023. Exports were combined with commercial passenger business restoration. After the company went light to the market, business transformation accelerated.
The quarterly report continued to improve, and deductions were not close to breakeven. The company's 1Q24 revenue was 11.3 billion yuan, up 4.6%. Net profit attributable to mother was 110 million yuan, a decrease of 29%, after deducting net profit of not attributable to mother - 0.1 billion yuan, which is close to reversing losses. In 1Q23, sales of light and medium trucks were 42,000 units, an increase of 18.9%; export sales were 58,000 units, an increase of 25%. The commercial vehicle business resumed combined exports, and self-hematopoietic capacity was gradually restored.
The new energy business has entered a harvest period, and the next major brand of Huawei Smart Select Cars is the next major brand. The company lays out new energy through multiple methods such as independent joint ventures, and joined hands with strong partners such as Volkswagen and Huawei. Starting in 2024, new models will be launched one after another, and new energy will enter the harvest period. The company is fully focusing on the Huawei Smart Car Selection Project, targeting the luxury smart electric market. Considering the relative gap in high-quality supply in the luxury electric vehicle market and the successful experience of the industry, the new Huawei Smart Car of this cooperation is worth looking forward to.
Risk warning: NEV market falls short of expectations; raw material prices fluctuate; sales of new models fall short of expectations.