Performance continued to increase, and 24Q1 recorded the highest profit in a single quarter
In 2023, the company achieved revenue of 1,827 billion yuan, +59.11% year-on-year; net profit to mother was 147 million yuan, +94.28% year-on-year. In terms of profitability, the company's gross profit margin in 2023 was 17.79%, -1.13pct; the 2023 net profit margin reached 8.14%, +1.85pct year on year. Among them, EGR products and injection systems had revenue of 550 million yuan, +97.33% year over year, accounting for 30.74% of total revenue, gross profit margin of 23.86%, -0.41 pct year on year; revenue from new energy products was 800 million yuan, 92.74% year on year, accounting for 43.82% of total revenue, gross profit margin of 12.01%, or -3.5 pct year on year. 23Q4's revenue reached 640 million yuan, +87.69% YoY/+41.55% month-on-month; net profit to mother reached 50 million yuan, a year-on-year increase of 486.50%, or +97.92% month-on-month, the highest profit in the company's history.
In 24Q1, the company's revenue reached 566 million yuan, +66.78% YoY/-11.64%; net profit to mother reached 53 million yuan, a year-on-year increase of 30.18%, or +5.86%. In terms of profitability, the company's 24Q1 gross margin reached 18.59%, -2.26pct/month-on-month; 24Q1 net margin reached 9.39%, -2.72pct/month-on-month 1.89pct. The 24Q1 company's three-fee rate (excluding R&D cost rate) reached 5.20%, -1.05 pct/ month-on-month -0.36 pct. Among them, the sales cost/ management cost/ financial expense ratio reached 1.11%/2.94%/1.16%, -0.13pct/-0.82pct/-0.11pct, R&D expenses reached 3.37%, and -1.08pct year on year.
EGR+ natural gas heavy truck dual drive, quick release of the company's products
In the EGR business, the company successfully developed key customers such as Yituo, Cummins, Yunnei Power, Quanchai Power, Xinchai Co., Ltd., Yuchai Co., Ltd., Changfa, and Changchai in the non-road market. With the official implementation of T4 emission regulations for non-road construction machinery at the end of 2022, the revenue of this part of the business increased rapidly throughout 2023. Second, the penetration rate of domestic hybrid models in new energy vehicles continues to increase. The company's customers in the hybrid EGR market have covered leading domestic customers such as BYD, Geely, GAC, Wuling Syke, Chery, and SAIC Motor Group, and with the popularity of BYD's DM-i platform models, the sales volume of the company's EGR module products supporting the platform increased significantly in 2023, and the rest of the customers' businesses have also entered the small-batch production stage. In the new energy business, the company established a wholly-owned subsidiary in 2021 to independently operate the new energy vehicle drive motor core related business. On the premise of ensuring a steady rise in the business of two major customers, a foreign-funded electric vehicle and energy company and United Auto Electronics, in 2023, it also successfully developed a series of direct supply customers such as Star Drive, Jinkang Power, Fudi Power, and Bosch, and indirectly supplied to Geely, Celis, BYD, Changan, Ideal, Xiaomi, NIO, SAIC, Chery, and Beam Auto in 2023, covering many best-selling models in the market. EGR+ natural gas heavy truck dual drive accelerates the release of the company's products.
Investment advice: Due to the pace of production capacity, the adjusted net profit for 24-26 was 2.3/3.2/40 million yuan (24-25 years ago, the value was 286/412 million yuan), and the current market value corresponds to PE 17/12/10 times, maintaining the “buy” rating.
Risk warning: Demand for automobiles falls short of expectations, raw material prices, etc. continue to rise, and the company's new business expansion falls short of expectations.