Lower the profit forecast, lower the target price, and maintain the holdings increase rating. The company released its 2023 annual report, with net profit attributable to mother of RMB 331 million, lower than previously anticipated. Therefore, we updated the net profit attributable to the parent company for 2024-2026 to RMB 6.08/8.91/1.70 billion yuan (previous value was RMB 709/1,110 million yuan), corresponding EPS of RMB 0.65/0.96/1.47. Considering the company's leading position and room for future business structure improvements, the target price was lowered to 16.25 yuan (previously 17.82 yuan) by 25x in 2024, and the holding increase rating was maintained.
Profitability is under pressure, and business restructuring can be expected in the future. The company released the 2023 annual report and the 2024 quarterly report. It achieved full-year revenue of 7.507 billion yuan, an increase of 25.85% over the previous year, and realized net profit of 331 million yuan, a year-on-year decrease of 24.27%. The company's revenue growth has benefited from the company's increased customer development efforts, improved product coverage, increased customer order delivery, and increased orders for new customers and new projects. The decline in net profit attributable to mother was mainly due to share payment expenses and changes in accounting estimates to accrue intangible asset amortization expenses more quickly. We expect that with the gradual adjustment of the company's business structure and the acceleration of the automotive electronics business, the company's profitability is expected to be further improved.
A breakthrough has been achieved in the automotive electronics business sector, which is expected to open up a new profit curve. During the reporting period, the company passed the audit of a well-known overseas automaker for the first time and entered its tier-1 supplier system; the automotive electronics intelligent controller business achieved sales revenue of 552 million yuan, an increase of 82.52% over the previous year. We believe that with the continuous penetration of electrification, connectivity, intelligence and sharing of automobiles, the automotive electronics industry has entered a golden period of development, driving the company's automotive electronics business segment to further grow.
Catalyst: The intelligent controller industry is booming, and the automotive electronics business forms a second growth curve.
Risk warning: The boom in the automotive electronics business falls short of expectations, and there is a risk that raw material prices will fluctuate.