Annual results improved steadily: annual revenue of $13.07 billion, up 6.2% year on year, benefiting from raw material price cuts, gross margin rose slightly to 32.1% year on year, net profit of shareholders of 2.49 billion yuan, up 10% year on year. Both revenue and profit sides increased in the second half of the year, maintaining a total annual dividend of HK$0.66 per share, an increase of 20% year on year, and net cash of 6.7 billion yuan, remaining abundant.
Five generation aircraft have been fully implemented, and the sales trend is positive: benefiting from the recovery in domestic customer demand for domestic appliances and daily necessities in 2023H2, and the promotion of fifth-generation and cost-effective models, orders and sales revenue for the main model Mars rebounded against the trend, achieving annual sales revenue and sales volume of 7.98 billion yuan and 34,500 units, up 9.5% and 15.6% year-on-year respectively, ending three consecutive financial seasons of decline; benefiting from the continuation of the trend of strong demand from car-side users, Jupiter's sales revenue and sales volume increased 14.5% and 15.4%, respectively; electric motor Demand for the model year was still weak, with revenue and sales falling 16.1% and 19.7% year on year, respectively, but 2023H2 revenue and sales growth rates have been positive month-on-month. The company's fifth-generation machines have achieved rapid order volume with leading energy saving and intelligent advantages. At the same time, through design iteration for different application segments, the company has broadened the source of customer demand in multiple industries and levels.
It is expected to continue to benefit from the resonance of domestic and foreign demand: in 2023, overseas sales reached 5.15 billion yuan, a year-on-year increase of 17.3%, sales share increased by 1.7 ppts to 39.4%, Europe achieved a marked increase in sales and share in key markets, stabilized in North America, and a year-on-year decline in Southeast Asia. We believe that based on the restructuring of the global industrial chain, equipment procurement demand from overseas regions is expected to maintain steady growth. The company has a layout in high-growth markets such as India, Mexico, and Turkey, and is expected to achieve a continuous increase in share; domestic revenue is flat year on year, but the domestic policy of expanding domestic demand continues. Large-scale equipment updates and consumer goods trade-in policies are expected to stimulate the company's major downstream customers in the home appliance, automobile and civilian goods manufacturing industries to achieve a virtuous cycle of “increased sales growth/increased investment in equipment”, which is expected to resume growth this year.
The target price was raised to HK$30. Purchase rating: Recent orders have continued to maintain a medium to high double-digit year-on-year growth rate, the sales growth rate of Mars and Jupiter models is expected to continue to be maintained, and the sales growth rate of Changfeiya electric models is expected to benefit from the recovery in customer demand from middle and high-end 3C companies and continue to improve. We are optimistic that the company's advantages in product strength, supply chain and global channel layout will continue to contribute positively to its sales volume and profit margin, and that its overseas multi-point layout will help smooth regional economic risks and performance fluctuations. Considering domestic competition and the average price impact of cost-effective model volume factors, we adjusted the company's 2024-2026 revenue and profit forecast to revenue of 153/171/18.8 billion yuan and net profit of 30/34/38 billion yuan, and raise the target price for the next 12 months to HK$30, corresponding to the 2024-2026 14/13/11 times forecast market profit Rate, buy rating.
Risk warning: Global manufacturing demand recovery falls short of expectations