Incident: The company released its 2023 annual report and 2024 quarterly report. In 2023, the company achieved revenue of 1,268 billion yuan, a year-on-year increase of 5.25%, net profit of 121 million yuan, a year-on-year decrease of 60.68%; in 2024Q1, revenue of 316 million yuan, an increase of 4.56%; and net profit to mother of 73 million yuan, a year-on-year decrease of 4.00%.
The performance was under pressure during the period affected by trust impairment. I am optimistic that the company's fundamentals will continue to improve in 2023. The company will continue to stabilize its position in the cold chain industry and expand applications in the fields of heat pumps, new energy, industrial automation, robotics, etc. During the reporting period, it achieved a total revenue of 1,268 billion yuan, an increase of 5.22% year on year, of which domestic revenue was 598 million yuan, up 16.13% year on year, and overseas revenue of 670 million yuan, down 2.8% year on year; net profit from non-return mother was 279 million yuan, down 3.20% year on year. Net profit to mother declined significantly, mainly due to the purchase of China Finance Trust products by the company and its subsidiaries of 408 million yuan overdue or deferred payment in 2023. The company confirmed a loss of 204 million yuan due to changes in fair value based on the principle of prudence. In the future, as the negative impact of trusts weakens, the company's fundamentals are expected to improve.
Servo motor sales were +69% year-on-year. Hollow cup motors, etc. will benefit from the humanoid robot trend. In 2023, servo motor sales volume was 22,700 units, up 69.06% year on year, revenue was 90 million yuan, up 62.27% year on year, and the share of revenue increased to 7.13%. In the context of the accelerated promotion of global energy efficiency policies, high-efficiency motors have ushered in development opportunities. Foreign countries such as the United States, Canada, and Europe have already imposed energy-saving and high-efficiency motors. Domestic requirements will add more than 70% of high-efficiency and energy-saving motors in 2025, and the company's ECM motor and servo motor business will continue to grow. Furthermore, the company closely follows the direction of the robot industry and increases investment in research and development of drivers, controllers, hollow cup motors, etc., which is expected to benefit from humanoid robot industry trends.
Traditional cold chain motors are growing steadily, and ECM motors are expected to be the leading cold chain micromotors under the energy efficiency upgrade trend. In 2023, sales volume of freezer motors, external rotor fans, and ECM motors were 844.30/310.24/1917,600 units, respectively, +0.02%/+11.96%/4.45%, respectively, with revenue of 3.15/5.94/228 million yuan; gross margins were 30.98%/36.75%/41.42%, respectively, +0.04/1.61/+2.12pcts, respectively. In recent years, the country has attached great importance to cold chain logistics. The central government and local authorities have intensively introduced policies to support the development of the cold chain industry. The Development and Reform Commission proposed to lay out and build 100 key cold chain logistics bases in the country by 2025. The 2024 State Council government work report also mentioned the need to strengthen cold chain logistics construction. The company's 6.7 million domestic plants and 8 million Thai plants have been successfully built, and it is expected that cold chain motors will continue to be released under the impetus of energy saving policies.
Investment advice
The company is expected to achieve revenue of 1,487 billion yuan, 1,827 billion yuan, and 2.06 billion yuan, and net profit to mother of 343 million yuan, 401 million yuan, and 463 million yuan in 202426. The price-earnings ratios corresponding to the current stock price are 15X, 13X, and 11X, maintaining a “buy” rating.
Risk warning
Overseas demand falls short of expectations, new product development falls short of expectations, customer development falls short of expectations, risk of exchange rate fluctuations, etc.