1) Igor released its annual report and quarterly report. In 2023, the company achieved operating income of 3.63 billion yuan, a year-on-year increase of 29%, net profit of 209 million yuan, a year-on-year increase of 9%. The first quarter of 2024 achieved operating income of 774 million yuan, an increase of 21% over the previous year, and a net profit of 58 million yuan, an increase of 207% over the previous year.
2) The company issued stock options and restricted stock incentive plans. The conditions for unlocking performance are based on 2023. The revenue growth rates for 2024-2026 should not be less than 25%, 50%, and 80%, respectively, and net profit growth rates of not less than 30%, 60%, and 90%, respectively, after deducting non-recurring profit and loss.
Key points of investment
The new energy business is expanding, and profitability continues to increase
The company's gross margin reached 22.34% in 2023, up 2.26 pcts year on year. Among them, revenue from energy products reached 2.63 billion yuan, up 42% year on year, gross margin reached 21.05%, up 3.31 pct year on year, lighting products achieved revenue of 8.1 billion yuan, down 4.6% year on year, and gross margin reached 26.49%, up 1.75 pct year on year.
In the first quarter of 2024, the company's gross margin reached 24.2%, up 7.05pct year on year, and the net margin reached 7.88%, up 4.9pct year on year. The company's first oil-immersed power transformer digital factory was fully put into operation, the degree of automation of the original production line was continuously improved, and the continuous implementation of lean efficiency improvement projects promoted continuous improvement in production efficiency. Labor costs and manufacturing costs continued to decline as a share of revenue, and material costs declined due to falling prices of major raw materials.
Seize the layout, domestic and overseas two-wheel drive
The company invested in the construction of a production base in Shouxian County, Anhui in 2023. The base continues to be built according to the high-efficiency digital factory model, and further iteratively upgraded on the basis of the original Jiangxi digital factory. The main construction was completed in 2023, and related machinery and equipment were delivered one after another. The project aims to be put into operation in the first half of 2024. Considering the strategic layout of globalization, the company planned a Mexican production base in 2023 to better promote the company's development of new customers in the North American market and enhance the stability and timeliness of the company's supply chain in the North American market. The base mainly plans to produce new energy products, and will use the successful experience of the company's domestic digital factory to build an integrated digital factory with a higher level of automation in Mexico.
Large space for incubating products
The company will continue to focus on the “2+X” strategic layout, based on energy products and lighting products, and also lay out new application fields such as vehicle power supplies, vehicle inductors, energy storage and charging piles. In 2023, the company's revenue from other products increased by 67.3611 million yuan year on year, up 54.04% year on year. The main thing is the gradual launch of incubation business products, effective progress in customer development, and the company has broad incubation business space, which is expected to become a new growth point for the company.
Profit forecasting
The company's revenue for 2024-2026 is 46.6, 58.3, and 6.97 billion yuan, respectively, and EPS is 0.87, 1.13, and 1.38 yuan, respectively. The current stock price corresponds to PE of 20, 16, and 13 times, respectively, maintaining a “buy” investment rating.
Risk warning
Transformer demand falls short of expectations; overseas business expansion falls short of expectations; risk of large fluctuations in raw materials; risk of lower equity incentive progress than expected; general market systemic risk.