Key points of investment:
Net profit for 24Q1 was +33%/29% YoY/Q1. The 24Q1 company achieved revenue of 9.66 billion yuan, +4.9% year over year; achieved net profit of 1.04 billion yuan, +33.1%/+29.2% year over year, after deducting non-net profit of 930 million yuan, +40.7% yoy/+10.7% yoy. Non-financial management mainly contributed 80 million yuan of commissioned investment income and government subsidies of 0.3 billion yuan.
Coal machine sector: Net profit increased 32% in 24Q1, and the industry may enter a high profit stage with steady demand. 24Q1's coal machine sector revenue/net profit was 48.3/1.09 billion yuan, +0.7%/32.3% year on year, with a net profit margin of 22.5%, +5.4pct year on year, the highest level of net interest rate in a single quarter since 20Q3. Thanks to the high gross margin of 24Q1 products confirmed revenue. We believe that the coal machine industry is dominated by stock replacement demand. The demand in the industry is large and relatively stable. Combined with a stable supply pattern and a stable profit level in the downstream coal industry, the profitability of coal mills is expected to remain high.
Auto zero sector: ASIMCO increased revenue and profit in 24Q1, and SEG reduced losses. 24Q1's auto parts segment revenue was 4.84 billion yuan, +9.5% year over year. Among them, ASIMCO/SEG revenue was 15.4/3.27 billion yuan, unchanged at +28.1% /year over year. ASIMCO's revenue growth stemmed from a year-on-year increase in sales in the Q1 commercial vehicle and passenger vehicle markets. The 24Q1 Auto Zero segment achieved net profit/net profit attributable to mother of 0.88/36 million yuan, +91.7%/+77.5% year-on-year. Among them, ASIMCO/SEG's net profit was 106.-0.29 million yuan, +34.4% /loss decreased by 0.18 million yuan over the same period last year. ASIMCO 24Q1 net profit margin was 10.8%, +1.5pct year over year.
Terminate the spin-off and listing of Hengda Intelligent Control without changing the company's long-term strategic goals. Based on factors such as the current market environment, the company decided to terminate the spin-off of Hengda Intelligent Control's listing on the Science and Technology Innovation Board and withdraw the relevant listing application documents in order to coordinate the business development and capital operation plans of Hengda Intelligent Control. Looking forward to the future, the company is still deeply involved in the coal machine sector, adhering to intelligently driving the development of complete products, digitally driving the transformation of the entire business process, and firmly adhering to the “intelligent, integrated, internationalized and social” development strategy supported by digitalization. At the same time, accelerate the electrification transformation of the auto parts sector. Strive to achieve the development target of 100 billion dollars by 2030 and build an intelligent manufacturing enterprise group with world influence.
Profit forecasting and valuation. We believe that the company's coal engine business is growing steadily, the zero auto business is recovering, the pace of transformation of new energy sources is firm and steady, and long-term development is worth looking forward to. We expect the company's net profit to be 37.3/43.4/94 billion yuan in 24-26 years (40.5/4.52 billion yuan), and the corresponding EPS is 2.09/2.41/2.76 yuan (24-25 original forecast is 2.27/2.54 yuan). Referring to comparable companies, we will give 10 times PE in 2024, corresponding to a target price of 20.9 yuan (original target price 22.65 yuan, 12 times PE in 2023, -8%), maintaining the “better than the market” rating.
Risk warning. Demand for downstream parts has declined, raw steel prices have risen sharply, and there is some uncertainty about transactions.