Investment events

1) In 2023, the company achieved revenue of 15.567 billion yuan, a year-on-year increase of 3.79%; net profit to mother of 530 million yuan, a year-on-year decrease of 33.73%; net profit after deducting non-attributable net profit of 477 million yuan, a year-on-year decrease of 35.77%.

2) In the first quarter of 2024, the company achieved revenue of 3.741 billion yuan, a year-on-year decrease of 2.46%; net profit to mother of 223 million yuan, a year-on-year decrease of 13.60%; net profit after deducting non-return to mother was 198 million yuan, a decrease of 9.59% year-on-year.

Key points of investment

Affected by falling stock prices of Hongxiang Co., Ltd. and performance compensation payments, the company achieved revenue of 15.567 billion yuan, an increase of 3.79% year on year; net profit to mother of 530 million yuan, a year-on-year decrease of 33.73%; net profit after deduction of 477 million yuan, a year-on-year decrease of 35.77%, mainly affected by asset impairment of 255 million yuan, investment income of 200 million yuan, and credit impairment of 90 million yuan. Among them, the stock price of Hongxiang Co., Ltd. (holding 6.94% of shares) fell sharply in 2023 (the decline in 2023) 60.31%), the long-term equity investment accrued asset impairment of 211 million yuan, and performance compensation affected investment income - 1.86 yuan. Net cash flow from operating activities was $1,634 million, an increase of 37.06% over the previous year.

Promote the “three growth curves” in an integrated manner, and develop new productivity companies such as bionic robots and electric aviation to actively promote the “three growth curves” strategy. The motor industry, including permanent magnet motors, motor+ frequency conversion, is growing steadily, and the new energy industry including photovoltaics, wind power, energy storage, hydrogen energy, and electric transportation is rapidly expanding. System solutions and product life cycle management services including “motor+conversion+host computer+sensor+N” are vigorously developed to ensure continuous breakthroughs in sales scale, and actively seek to generate hydrogen and maglev floats in bionic robots, electric aviation, green electricity Bearings, difficult permanent magnet drive New progress has been made in new fields such as system solutions. In 2023, the company's industrial motor and drive industry, household motor and control industry, and electric transportation industry achieved 9.645 billion yuan, 3.111 billion yuan, and 972 million yuan respectively, up 10.02%, a year-on-year increase of 10.02%, a decrease of 3.99%, and an increase of 0.33%.

Deeply involved in the field of electric aviation, benefiting from the explosion of the low-altitude economy

Since 2019, the company has begun to lay out electric aviation, gradually forming a “3+1" product layout, including small, medium and high-power grade products and a set of civil aviation airworthiness standards. The products are mainly used in the eVTOL and drone fields. In addition, the company has rich customers in the field of electric aviation, and has cooperated deeply with well-known domestic and foreign companies such as COMAC, Shanhe Star Airlines, Wanfeng Aowei, and Rolls-Royce to accelerate the commercialization of electric aviation technology, and jointly build a “joint laboratory” with the China Civil Aviation Science and Technology Research Institute to participate in the formulation of standards related to electric aeronautical power systems. On the basis of electric drive systems for new energy vehicles, breakthroughs have been made in electric drive design, algorithms, and research and development of new materials in response to higher safety and reliability requirements for flying vehicles and more stringent lightweight requirements. By deepening the field of electric aviation, it is expected that the future will fully benefit from the explosion of the low-altitude economy market.

Profit forecasting and valuation

Maintain profit forecasts and maintain a “buy” rating. The company is a global leader in industrial motors, and is working with leading mainframe companies to further develop in the field of electric space. We expect the company's net profit forecast for 24-25 to be 13.02 billion yuan and 1,432 billion yuan, with an additional 2026 net profit forecast of 1,694 billion yuan, corresponding EPS of 0.99, 1.09, and 1.29 yuan. The PE corresponding to the current stock price is 15, 14, and 12 times, respectively. Maintain a “buy” rating.

Risk warning

Support for low-altitude economic policies fell short of expectations; industry competition intensified; and raw material prices fluctuated greatly.