Incident: On April 29, 2024, Sanhua Intelligent Control released the 2023 Annual Report and 2024 Quarterly Report. In 2023, the company achieved total revenue of 24.558 billion yuan (YoY +15.04%), net profit attributable to mother of 2,921 billion yuan (YoY +13.51%), and net profit not attributable to mother of 2,917 billion yuan (YoY +27.30%).
2024Q1's total revenue was 6.440 billion yuan (+13.40% YoY), net profit attributable to mother was 648 million yuan (+7.73% YoY), and net profit not attributable to mother was 671 million yuan (+20.53% YoY).
The auto parts business expanded rapidly in 2023, and domestic sales achieved a faster growth rate. 1) By business:
In 2023, the company's refrigeration and air conditioning electrical components/ auto parts business revenue was 146.44/9.14 billion yuan respectively, +5.86/ +31.94%, respectively. Among them, the revenue from the auto zero business grew rapidly, or was driven by the development of the downstream NEV industry. The company's development of next-generation automotive electronic expansion valves and the upgrading of pump products are now relatively good. 2) By region: In 2023, the company's domestic/overseas revenue was 134.03/11.154 billion yuan respectively, +17.41/ +12.31% year-on-year respectively. Both achieved double-digit growth, and the domestic sales market grew faster.
2024Q1 gross margin grew steadily, and net margin was under pressure in the short term. 1) Gross profit margin: 2023Q4/2024Q1 companies' gross margins were 29.24/ 27.05% respectively, +0.60/+1.48pct, respectively, and both achieved steady growth. 2) Net interest rate: 2023Q4/2024Q1 net interest rates were 13.18/10.03%, respectively, -3.49/-0.69pct year-on-year, respectively, facing short-term pressure. 3) Expense ratio: 2023Q4 and 2024Q1 companies' sales/management/ R&D/finance cost rates were 4.22/8.24/1.81/ -0.16% and 1.99/6.53/4.92/ -0.35%, respectively, compared with +1.61/-0.37/ -2.62/-0.88pct and -0.22/+1.11/-0.21/-1.23pct, respectively. The 2024Q1 management cost ratio increased.
Investment suggestions: On the industry side, in the context of global clean carbon reduction and China's “double carbon”, energy efficiency upgrades may become a growth point for the refrigeration and air conditioning electrical parts industry, and downstream NEVs will grow or drive demand for upstream auto parts. On the company side, as a component leader, leverages traditional business advantages, auto parts products are continuously optimized and upgraded, the field of bionic robots focuses on mechatronic actuators, and strategic emerging businesses are actively expanding, and the company's revenue performance is expected to continue to grow. We estimate that in 2024-2026, the company's net profit to mother will be 36.72/42.90/5.298 billion yuan, the corresponding EPS is 0.98/1.15/1.42 yuan, respectively, and the PE corresponding to the current stock price is 22.27/19.06/15.44 times. Maintain a “buy” rating.
Risk warning: raw material price fluctuations, exchange rate fluctuations, new business development falling short of expectations, etc.