Incident: The company released its annual report for the year 23 and the quarterly report for '24. It achieved revenue of 4.60 billion yuan, +25.5% year on year, net profit to mother of 550 million yuan, +6.7% year on year; 1Q24 achieved revenue of 1.06 billion yuan, +25.3% year on year, and realized net profit of 100 million yuan, +13.4% year over year.
Revenue is growing steadily, performance is slightly lower, and profit margins are yet to be improved.
Year 23: In the field of traditional interiors, the company firmly grasped development opportunities, continuously optimized its customer structure, and achieved steady growth in performance. In '23, the company achieved operating income of 4.60 billion yuan, +25.5% year over year, and achieved net profit of 550 million yuan to mother, +6.7% year on year. According to the annual report, the company did not meet the company's expectations at the beginning of the year on the profit side in '23. The main reasons were: (1) the impact of changes in the fair value of some financial assets among other non-current financial assets on current profit and loss of 23.581 million yuan; (2) the investment income from associated companies decreased by 34.185 million yuan compared to the plan. Looking at a single quarter, 4Q23 achieved revenue of 1.52 billion yuan, +40.4% year over month, and realized net profit of 160 million yuan to mother, +13.9% year on year, and +5.1% month on month. Looking at the cost ratio for the period, the company's sales/management/R&D/finance expenses ratio in '23 was 0.8%/6.1%/3.8%/1.1%, respectively. The overall cost rate for the period decreased by 0.3 pct compared to '22, and remained relatively stable. Among them, the management/finance cost ratio decreased by 0.3 pct, and the R&D cost rate increased by 0.3 pct. In terms of profit margin, the company's gross margin in '23 was 20.4%, -1.2pct year on year, net margin was 11.7%, and -2.1pct year on year.
1Q24:1Q24 achieved revenue of 1.06 billion yuan, +25.3%/-30.5% YoY, realized net profit to mother of 100 million yuan, and +13.4%/-35.5% YoY. The month-on-month decline was mainly affected by Spring Festival factors. In terms of profit margins, 1Q24 achieved gross and net margins of 17.0% and 9.7%, respectively. The gross and net margin decreased from the full year level of 23. In terms of the cost ratio for the period, the 1Q24 sales/management/R&D/finance expenses ratio was 0.7/6.0/4.9/ 1.3%, respectively. The cost ratio for the period was higher than the annual level of 23.
Expanding the new energy+high-end customer market, there is sufficient potential for growth. In terms of customer structure, the company continues to expand the new energy and high-end customer market. The company maintains stable and good partnerships with BYD, Tesla, Volkswagen, Mercedes-Benz, BMW, NIO, Ideal, Xiaopeng, Zero Run, Nana, BAIC Jihu, Chery New Energy, Xiaomi, Extreme, British Jaguar Land Rover, North American ZOOX, etc. 23 companies accounted for 32.9% of sales to new energy customers (31.0% in '22). In terms of high-end customers, in March and December 2023, the chairman led the team to visit Mercedes-Benz, BMW, and Volkswagen in Europe. The customer also visited many of the company's subsidiaries, and received customer recognition one after another, entered the German OEM system, and directly participated in RFQ quotations. In terms of targeted projects, in 23, the company successively received project targets for assembly products such as door panels, main and auxiliary instrument panels, and columns from well-known domestic new energy OEMs and well-known German luxury brand OEMs. The total project amount for projects announced within 23 years is estimated to be 6.48 billion yuan during the life cycle.
Production capacity layout is rationally planned, and multi-base construction is progressing steadily. In '23, the company added bases in Zhaoqing, Dalian, Hefei, and Anqing, and further expanded production capacity at sites such as Shenyang and Tianjin. In '23, it actually invested 812 million yuan, including 532 million yuan in equipment and 276 million in infrastructure, further improving the implementation of the regional layout, laying a solid foundation for the company's sustainable development. It is expected that in 2012, batch and small-batch production will be completed in Guangzhou, Zhaoqing, and Hefei, Anhui. The Anqing base and Tianjin phase II will complete commissioning and mass production, and the Shenyang base will increase investment. The company will provide guarantees at the source, give full play to the technical support of the headquarters and the help of business backbone from various teams, and concentrate resource advantages so that the business of each base can develop more steadily.
Maintain an “overweight” investment rating. The company's customer structure is being continuously optimized, cooperation with old customers continues to be strengthened, and new projects from new customers are continuously being acquired. The net profit for 24-26 is estimated to be 6.8/8.1/970 million yuan, respectively, and the corresponding PE is 8.7/7.3/6.1X, respectively, maintaining the “increase” investment rating.
Risk warning: (1) the development of the automobile industry falls short of expectations; (2) the risk of fluctuations in investment returns; (3) the concentration of major customers is too high; (4) the risk of fluctuations in raw material prices, etc.