Incident: The company released the 2023 annual report and the first quarter report of 2024. The company achieved operating income of 24.558 billion yuan in the full year of 2023, an increase of 15.04% over the previous year; realized net profit of 2,921 billion yuan, an increase of 13.51% over the previous year. In Q1 2024, we achieved revenue of 6.440 billion yuan, an increase of 13.40% over the previous year, and realized net profit of 648 million yuan, an increase of 7.73% over the previous year.
The gross margin for the whole year increased year over year, and the expense ratio increased during the period: in 2023, the company's gross margin was 27.89%, +1.81 pct year over year. Among them, the gross margin of the refrigeration and air conditioning electrical parts business was 28.20%, +2.04pct year on year, and the gross margin of the auto parts business was 27.43%, +1.51 pct year on year. In 2023, the company's sales expense ratio, management expense ratio, and R&D expense ratio were 2.70%, 6.01%, and 4.47%, respectively. The year-on-year increase was +0.30pct, +0.08pct, and -0.16pct, respectively. Among them, the increase in sales expenses was mainly due to an increase in employee remuneration, market maintenance costs, travel expenses, etc., and the increase in the management cost ratio was mainly due to an increase in employee remuneration, office expenses, intermediary service fees, and business hospitality expenses.
Continue to expand its business layout and accelerate the pace of globalization: In terms of the refrigeration and air conditioning electrical parts business, the company continues to expand its original business scale and find business growth points in new fields. In terms of production base progress, it is expected to complete the construction of the second phase of the Vietnam factory and land production lines in 2024, expand production lines in Mexico and Thailand, and expand and optimize the global production layout. In the auto parts business, we focus on the core projects of key global customers and actively promote the construction of production bases in Mexico, Poland and Shaoxing Binhai, Zhongshan, and Shenyang.
In terms of strategic emerging business, in the field of bionic robots, the company focuses on mechatronic actuators, cooperates with the customer's product development, trial production, iteration and final mass production implementation in all aspects, simultaneously cooperates with the customer's mass production goals, and actively plans the overseas production layout of mechatronic actuators.
Investment proposal: The company is expected to achieve net profit of 35.46/42.04/4.929 billion yuan in 2024-2026.
The corresponding PE was 23.06/19.45/16.59 times, respectively, maintaining the “gain” rating.
Risk warning: risk of fluctuations in raw material prices; risk of increased industry competition; risk of macroeconomic downturn.