Incident: (1) The company released its 2023 annual report, and achieved revenue of 17.244 billion yuan in 2023, +15.63% year over year; net profit to mother was 1,131 billion yuan, +16.78% year over year. Among them, 2023Q4 achieved revenue of 4.470 billion yuan, -3.95%/-2.51% year-on-month, and net profit of 256 million yuan, or +17.02%/-25.80% year-on-month, respectively. (2) The company released its report for the first quarter of 2024. 2024Q1 achieved revenue of 4.692 billion yuan, +21.58%/+4.97%, respectively; net profit to mother was 361 million yuan, +37.56%/+41.02%, respectively. (3) Since 2024, the company has announced that the total life cycle of air suspension system assembly product project orders is about 1,666 billion yuan.
Overseas mergers and acquisitions have been implemented in China, and the results have exceeded expectations. In 2023, the company's production accounts for 61.18%, 30.01%, and 8.81% in the three regions of Asia, Europe and America, respectively. Through effective integration of global resources, both internal extension and epitaxial two-wheel drive have been achieved. The company actively promoted the domestic implementation strategy for overseas mergers and acquisitions, and the performance growth rate exceeded expectations. (1) Sealing business: KACO China (Wuxi Jiake, Anhui Jiake) achieved revenue of 785 million yuan in 2023, +24.70% YoY, and net profit of 123 million yuan, +41.94% YoY. (2) NVH business: WEGU localization is progressing smoothly, and the performance growth trend is good. In 2023, Anhui Weigu achieved revenue of 262 million yuan, +10.44% year-on-year, and net profit of 37 million yuan, an increase of 58.79% year-on-year. (3) Cooling pipeline business: The company completed the cooling system pipeline assembly upgrade and developed overseas markets through the merger and acquisition of TFH. At the same time, Anhui Tescom was established to achieve localized operation of TFH. In 2023, Anhui Tescom achieved revenue of 949 million yuan, a year-on-year increase of 67.53%, and net profit of 62 million yuan, a year-on-year increase of 59.96%.
The new energy sector is developing well. The company actively lays out the field of new energy vehicles, with intelligent chassis systems as the core. At the same time, it is at the leading international level in various new energy sectors such as thermal management pipelines and battery pack motor seals. The new energy business reached 5.976 billion yuan in sales in 2023, accounting for 36.27% of the revenue of the automobile business in 2023, an increase of 10.52pp over the previous year. The sales volume of the new energy business in China was 4.323 billion yuan, accounting for 53.10% of domestic revenue in 2023.
The three major incremental businesses received sufficient new orders. According to the company's annual report, up to now, the company's domestic air suspension business has received a total order output value of about 12.1 billion yuan, of which the total order output value for assembly products is about 1.7 billion yuan, and it is expected that more projects will be targeted in the future; the lightweight business has received a cumulative order of about 8.5 billion yuan; and the thermal management system business has received a total order value of about 12 billion yuan.
Profit forecasting and investment advice. As the company's various business segments are implemented domestically, the company's performance has steadily improved, business orders have continued to be mass-produced, and performance has maintained rapid growth. The company's net profit for 2024-2026 is estimated to be RMB 1,409/16.71/19.12 billion, respectively, with a CAGR of 19.1%. The company was given 18 times PE in 2024, corresponding to a target price of 19.26 yuan, maintaining a “buy” rating.
Risk warning: Risks such as increased market competition, fluctuating raw material prices, changes in the overseas business environment, and failure to implement incremental business projects as expected.