Description of the event
The company released its 2023 annual report and 2024 quarterly report. In 2023, the company achieved revenue of about 6.8 billion yuan, an increase of 23% over the previous year; net profit to mother was about 630 million yuan, an increase of 33% over the previous year, and net profit after deducting non-return to mother was about 360 million yuan, an increase of 39% over the previous year. The company achieved revenue of 1.8 billion yuan in 2024Q1, up 17% year on year, net profit to mother about 140 million yuan, down 14% year on year, and net profit after deducting non-return to mother about 120 million yuan, up 26% year on year.
Incident comments
Looking at the full year, the company's revenue in 2023 increased by double digits year on year. Specifically, industrial automation products, intelligent equipment products, and precision connection products grew by 54%, 23%, and 16%, respectively, and gross margins were 32.9%, 27.9%, and 7.8%, respectively, up 3.5 pct, down 4.5 pct, and decreased by 8.4 pct year on year. Among them, the revenue of smart home appliances and electronic control products increased 25% year-on-year in 2023, benefiting from increased demand for inverter appliances in overseas markets represented by India, and the growth of the smart bathroom business, achieving a gross profit margin of 25.5%, up 1.2pct year on year; power products increased 13% year over year; new energy and rail transit components increased 35% year on year, mainly benefiting from increased demand from downstream customers and the introduction of new customers. In the end, the company's new energy and rail transit parts business achieved a gross profit margin of 22.9%, YoY. Increase by 1.7 pct. At the same time, the company achieved gross margin of about 24.9%, a year-on-year increase of about 1.2 pct, a year-on-year increase of 19.7%, a year-on-year increase of 1 pct. The sales expense ratio and management expense ratio were 4.8% and 3.1%, respectively, an increase of 0.6 pct and 0.4 pct. The R&D expenses rate was 11.4%, a year-on-year decrease of 0.1 pct, and the financial expenses ratio was 0.4%, which was basically the same as the previous year. In addition, the company obtained fair value and investment income of about 276 million yuan due to the increase in the valuation of the investment company, and generated about 55 million yuan in interest expenses on option incentives and convertible bonds. Excluding the impact of option incentives and interest expenses on convertible bonds, the company ultimately achieved net profit deducted from mother of about 400 million yuan, an increase of about 46% over the previous year.
On a quarterly basis, the company's 2024Q1 revenue increased year on year, achieving gross margin of about 25.9%, up 1.8 pct year on year.
The company's expense ratio for the 2024Q1 period was 19.05%, up 1.1 pct year on year. Among them, the sales expense ratio, management expense ratio, and R&D expense ratio were 4.4%, 3.0%, and 11.5%, respectively. The year-on-year increase was 0.5 pct, 0.4 pct, and 0.9 pct, respectively. The financial expense ratio was 0.1%, down about 0.7 pct year on year. In the end, net profit attributable to 2024Q1 was approximately 140 million yuan, a year-on-year decrease of about 14%.
In terms of other financial indicators, the 2023 and 2024Q1 companies achieved net operating cash flow inflows of 310 million yuan and 50 million yuan respectively; 2023 and 2024Q1 capital expenses were 40 million yuan and 110 million yuan respectively, indicating that the company is actively promoting production capacity construction.
The company's future growth potential is once again emphasized, on the one hand, from the deepening development of the company's multiple product lines and the continuous expansion of the product line; on the other hand, from the benefits brought by the company's continued equity investment. The company's net profit attributable to shareholders of the parent company is estimated at 760 million yuan in 2024, corresponding to 18 times the valuation. Maintain a “buy” rating.
Risk warning
1. The risk of a sharp increase in the price of raw materials;
2. The pace of expansion in new fields falls short of expectations.