Key points of investment
24Q1 revenue reached a record high. The gradual mass production of new projects led to continuous growth in performance. In 2023, the company achieved revenue of 1,519 billion yuan, an increase of 35.38% over the previous year; net profit to mother was 91 million yuan, an increase of 99.32% over the previous year. The 24Q1 company achieved revenue of 569 million yuan, an increase of 103.44% over the previous year, and realized net profit of 32 million yuan, an increase of 187.11% over the previous year. The reason for the sharp year-on-year increase in performance is mainly due to the gradual implementation of the company's new projects and mass production. As orders and production capacity continue to grow, the company's future performance is expected to continue to increase.
The Wenjie M7 is popular, and the skeleton assembly products have entered a rapid growth trajectory. Since its launch in September 23, the new Wenjie M7 has continued to be popular. According to Quanjie's official subscription account data, in March '24, the new Wenjie M7 delivered 24,600 units, ranking first in sales of China's new power models.
The company is the exclusive supplier of the M7 seat frame. The company's skeleton assembly achieved revenue of 916 million yuan in '23, an increase of 63.85% over the previous year; at the same time, the gross margin of the skeleton assembly in '23 was 13.38%, an increase of 6.16 pcts over the previous year. The company's skeleton assembly order basically packages and supplies a complete set of seat frames for the customer's new models. The price of bicycle seat frames for the new project continues to rise, and profitability continues to grow. As the M7 model continues to be popular, the company's skeleton assembly products are expected to continue to maintain a rapid growth trend.
Products are being expanded horizontally, and railway containers are progressing smoothly
Based on the company's three core technologies: precision stamping, precision injection molding, product assembly and integration technology, the company is actively expanding new products such as special railway containers and automotive electronics, with a view to continuously expanding the company's revenue sources in the future. The company revealed in its 23 annual report that in 2022, the company successfully bid for Golden Eagle Heavy Industries' special railway container business. The project was mass-produced in October 2023, and production climbed to a relatively stable state at the end of 2023. As the company continues to expand its subsequent products, it is expected to inject growth momentum into future performance.
Profit forecasting and valuation
We expect the company's revenue for 2024-2026 to be 2.49 billion yuan, 3.13 billion yuan, and 3.65 billion yuan, respectively; net profit to mother will be 1.8, 220, and 280 million yuan respectively, with year-on-year growth rates of 96.1%, 20.8%, and 30.5%, respectively, corresponding to PE 20, 17, and 13 times, respectively, maintaining the “buy” rating.
Risk warning
New project volume falls short of expectations, seat frame customer acquisition progress falls short of expectations, etc.