Incident: In 2023, the company achieved revenue of 5.957 billion yuan, +39.67% year on year, net profit to mother of 913 million yuan, +40.84% year on year; 2024Q1 achieved revenue of 1,642 billion yuan, +30.69% year over year, and net profit to mother of 232 million yuan, +36.92% year over year.
The performance was outstanding, and the medium and large parts business opened a “second growth curve”: in a single quarter, 2023Q4/2024Q1, global passenger car sales were +5.9%/-12.2% month-on-month, respectively, and the company's revenue was +8.3%/-4.7% month-on-month, respectively, in line with industry sales trends. By region, the domestic business benefited from the advancement of the medium and large parts layout. Domestic sales revenue in 2023 reached 2.67 billion yuan, +63% year over year; export sales reached 3.23 billion yuan, +29% year over year, which is expected to mainly benefit from the rise in production of Mexican factories.
Looking ahead to the whole year, the convertible bond project and the Mexican factory are progressing steadily, and the European factory is expected to land. Sales volume for medium and large customers such as Ideal is growing rapidly. With the simultaneous volume of production capacity+demand, the company has sufficient potential for growth.
Gross margin remained stable, and foreign exchange profit and loss fluctuated expense ratio: 2024Q1. The company achieved a gross profit margin of 29.7%, flat year over year, +0.3 PCT compared to the previous month. Against the backdrop of an increase in the share of medium to large business, the company's gross margin remained stable with excellent cost control capabilities. The total cost rate for the period was 13.3%, -0.1 PCT year over year and +2.6 PCT month over month. It is expected to be mainly affected by financial expense rate fluctuations due to exchange gains and losses.
Actively expand new businesses and steadily advance global production capacity: 1) The company actively transforms large parts of new energy and actively develops a “second growth curve”. In 2023, new energy revenue accounted for 30%, and new orders accounted for 90%, of which structural components accounted for 30%, three-electric systems accounted for 40%, and intelligent driving and thermal management accounted for 10%. 2) The production capacity gradient is clear. The 2023 convertible bond project, Mexico Phase I, and Maanshan Phase I are steadily climbing, the European factory is expected to be completed in 2024, and the Mexican Phase II is expected to be put into operation in 2025.
Profit forecast and valuation: The company's net profit for 2024-2026 is estimated to be 11.4/14.3/1.77 billion yuan, respectively, and the corresponding PE is 16/13/11 times, respectively, maintaining a “buy” rating.
Risk warning: Continued macroeconomic downturn has led to weak industry demand, risk of fluctuations in raw material prices and exchange rates, overseas market risks, and adverse risks of new business development.