Description of the event

The company released its 2023 annual report, achieving full year revenue of 6.963 billion yuan, an increase of 3.89%; realized net profit of 458 million yuan, an increase of 13.82%; and realized net profit of 422 million yuan without return to mother, an increase of 10.43%.

The company released its 2024 quarterly report, achieving revenue of 1,751 billion yuan, an increase of 3.66%; realized net profit of 115 million yuan, an increase of 10.53%; and realized net profit of 90 million yuan without return to mother, an increase of 28.79%.

Incident reviews

Both major businesses, forklifts and intelligent logistics, have achieved steady growth. In 2023, the company's two main businesses, warehousing and logistics vehicles and smart logistics integrated systems, achieved revenue of 35.46 billion yuan and 3.372 billion yuan respectively, with year-on-year growth rates of 5.05% and 2.23% respectively, all achieving steady growth.

Both gross profit margin and expense ratio have increased. The company's overall gross margin increased by 1.98 pct to 22.22% year on year in 2023. Among them, the gross margin of warehousing and logistics vehicles and equipment increased by 3.9 pct to 23.63% year on year, and the gross margin of the smart logistics integrated system increased 0.16 pct to 20.34% year on year.

In terms of the cost ratio, the company's expense ratio increased by 2 pct to 14.32% year on year in 2023. Among them, the sales expense ratio increased 0.85 pct to 4.96% year on year, the management fee ratio increased 0.26 pct to 5.08% year on year, the financial cost ratio increased 0.97 pct to 0.48% year on year, and the R&D expense ratio decreased 0.07 pct to 3.80% year on year.

The big car strategy continues to advance and maintain high growth. The company focuses on resources to actively expand truck production capacity, fully support the improvement of truck product serialization and hierarchical research and development, complete new products such as high-performance G series electric counterweight forklifts, adjust the domestic and international marketing system for large trucks, optimize and build a strong supply chain system, and actively cultivate and introduce high-end talents. The company's truck sales continued to increase by more than 60% in 2023.

Intelligent logistics is actively expanding the market, and management efficiency is expected to continue to improve. Among them, France's SAVOYE company continues to expand its market in the US, southern Europe, etc.; while continuing to maintain its leading market position in the new energy industry, Zhongding Integrated is actively developing non-new energy industry markets, starting to lay out photovoltaics and semiconductors, continuing to consolidate its advantages in the cold chain, pharmaceuticals, auto parts and industrial supplies industries, while actively promoting overseas layout. We believe that with the continuous optimization of the company's management system and supply chain system, the management efficiency and profitability of the intelligent logistics sector are expected to continue to improve.

Profit forecasting and valuation

With the interpretation of the three major logics of the recovery of the small car market+continued promotion of the large vehicle strategy + intelligent logistics profitability restoration, the company's revenue for 2024-2026 is expected to be 75.24, 81.26, and 8.691 billion yuan, respectively, with year-on-year growth rates of 8.05%, 8.00%, and 6.95%; net profit to mother is 5.18, 6.05, and 688 million yuan, with year-on-year growth rates of 13.23%, 16.74%, and 13.76%.

The company's 2024-2026 performance corresponding PE was 10.33, 8.85, and 7.78 times, respectively, covered for the first time, and gave a “buy” rating.

Risk warning:

The recovery of the small car market fell short of expectations; the advancement of the big car strategy fell short of expectations; market competition increased risks.