Event: The company released its annual report for '23 and its quarterly report for '24
1) Annual Report for the year 23: Achieved operating income of 1,268 billion yuan, an increase of 5.25% year on year; realized net profit of 121 million yuan, a year-on-year decrease of 60.68%.
2) 2014 Quarterly Report: Achieved operating income of 316 million yuan, a year-on-year increase of 4.56%; realized net profit to mother of 73 million yuan, a year-on-year decrease of 4.00%.
Against the backdrop of a global economic slowdown, the company achieved revenue growth. The company achieved revenue of 1,268 billion yuan for the full year of '23, an increase of 5.25% over the previous year, and achieved positive growth. Looking at domestic and overseas splits, the company's overseas sales revenue in '23 reached 670 million yuan, a year-on-year decrease of 2.86%, and achieved domestic sales revenue of 597 million yuan, an increase of 16.13% over the previous year.
Servo motor revenue continues to rise, and its share of revenue continues to rise. The company achieved annual revenue of 90 million yuan for servo motors in '23, an increase of 62.27% over the previous year, accounting for 7.13% of revenue. Six departments, including the Ministry of Industry and Information Technology and the Development and Reform Commission, jointly issued the “Industrial Energy Efficiency Improvement Action Plan”, which plans to add more than 70% of high-efficiency and energy-saving motors by 2025. We believe that policy incentives will greatly increase domestic demand for high-efficiency and energy-saving motors, continue to drive the growth of the company's servo motor business, and are expected to become a new growth pole for the company.
Actively implement innovation-driven development strategies and continuously expand product varieties and application space. The company has focused on the motor, fan and micro motor industry for 30 years, and has excellent innovative R&D and production capabilities. The company's mid-year report mentioned that by the end of '23, there were 256 active patents, including 30 invention patents, 165 utility model patents, 61 design patents, and 38 software copyrights. We believe that with years of solid technical reserves and leading industrialization capabilities, the company is expected to increase new development momentum in the fields of motors, fans, micro motors, drives and controllers, hollow cup motors, pumps, and new energy vehicle components in the future.
The development of the cold chain logistics industry boosts the company's corresponding motor business development. According to analysts from the China Business Industry Research Institute, China's cold chain logistics market will reach 561.6 billion yuan in 2023 and 641.6 billion yuan in 2024. The company's freezer motors, external rotor fans, and ECM motors are one of the main components of cold chain equipment. The sales volume in 23 years was 8.443 million units/3.1024 million units/1.917,600 units, respectively, with year-on-year increases and decreases of 0.02%/11.96%/-4.45%, respectively, accounting for 24.82%/46.85%/17.95% of revenue, respectively.
The central government and local authorities have intensively introduced policies to support the development of the cold chain industry. The report on the work of the State Council government on March 5, 2024 also mentioned the need to strengthen the construction of cold chain logistics. We believe that the demand for cold chain logistics will continue to drive the company's related business development.
Maintain a “Highly Recommended” investment rating. We expect the company's 24-26 revenue to be 15.41/18.75/2.08 billion yuan, and net profit to mother will be 3.31/4.09/495 million yuan, corresponding to the current PE of 15.4/12.4/10.3 times, maintaining the company's “Highly Recommended” rating.
Risk warning: Overseas sales are weak; industry competition increases risks, etc.