2023 results under pressure
The company achieved revenue of 2,808 billion yuan in 2023, -2.29% year on year; net profit to mother - 365 million yuan, -296.73% year over year. In terms of profitability, the company's gross profit margin in 2023 was 11.99%, -5.68pct year on year; net profit margin in 2023 was -13.22%, -20.04pct year on year. Among them, the electronic components business revenue was 1.25 billion yuan, -24.25% year on year, accounting for 44.68% of total revenue, gross profit margin of 10.41%, -8.83 pct year on year; auto parts business revenue was 1.31 billion yuan, +28.45% year on year, accounting for 46.66% of total revenue, gross profit ratio of 11.8%, or -0.92 pct year on year. The 23Q4 company's revenue was 730 million yuan, -9.11% YoY/-9.68% month-on-month; net profit to mother was 427 million yuan.
The 24Q1 Company's revenue was 752 million yuan, +24.51% YoY/+3.05% month-on-month; net profit to mother was 0.36 million yuan, +15.06% YoY, turning a month-on-month loss into a profit. In terms of profitability, the company's 24Q1 gross margin reached 10.98%, -5.62 pct/month-on-month 6.38pct; 24Q1 net margin reached 4.55%, -0.88pct/month-on-month 63.81 pct. The 24Q1 company's three-fee rate (excluding R&D cost rate) reached 4.88%, -3.37 pct/ 0.36 pct month-on-month. Among them, the sales cost/ management expenses/ financial expenses ratio reached 1.42%/3.08%/0.37%, respectively, -0.37pct/-1.86pct/-1.14pct, R&D expenses reached 3.49%, and -0.84pct year-on-year.
The touch industry is at a cyclical low point, and profits are temporarily under pressure
The company's electronic components business is mainly touch displays. In 2023, looking at the overall market, the touch display sector is still at a low point in the industry cycle. Due to insufficient overall market demand, competition in the industry intensified, so the revenue and gross margin of this business declined a lot. At the same time, the company's production expansion project is still in the construction cycle and has failed to produce direct economic benefits. In the future, with the gradual recovery of the touch industry, the gradual release of the company's newly built production capacity, and the advent of the exchange cycle, the touch business is expected to improve.
Auto zero business benefits from new energy vehicles and grows rapidly
The company's auto parts mainly include power transmission assemblies and power transmission parts. In 2023, newly ordered equipment was put in place one after another, and production capacity was gradually increased; the company continued to maintain good business cooperation with well-known companies in the field of new energy such as Nidec, Valeo, Siemens, Gleb, Schaeffler, and Hezhong Motors. End users include internationally renowned automakers such as Geely Automobile, SAIC Motor Group, and BYD. In 2023, the company built a new production line base in Maanshan to provide customers with new energy electric drive products. New supporting models have been launched one after another, expanding the company's growth space in the field of core components for new energy vehicles. At the same time, the company is also actively promoting the construction of the second phase of the Maanshan project.
Investment advice: Since the touch industry is still at a cyclical low point, the profit forecast was lowered. The estimated net profit for 24-26 is 1.47/2.16/292 million yuan (the previous time was an estimated profit of 346/442 million yuan in 2024/2025), and the current market value corresponds to PE 25/17/13 times, maintaining a “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.