Profit prediction and investment advice

Best is a supplier of high-quality precision machined parts. Focusing on the three-tier industrial strategy, the company focuses on R&D, production and sales of precision parts and intelligent equipment and tooling products. On the other hand, the company also uses various first-mover advantages in the field of intelligent equipment and tooling to extend its business to high-end aviation equipment manufacturing, industrial automation equipment, industrial machines, and robot figures.

We believe that the penetration rate of new energy vehicles has gradually increased in recent years. Although pure electric vehicles are not equipped with turbochargers, the volume of plug-in hybrids is still expected to continue to bring incremental markets to turbochargers in the next few years. We judge that the T1 turbocharger pattern is stable and the leading share is concentrated. Best is tied to high-quality leading customers, laying a solid foundation for the company's subsequent continuous development by actively planning to go overseas, etc.

We believe that linear rolling functional components are widely used, and the localization rate is still low. The screw market for humanoid robots and smart electric vehicles is on the eve of an explosion, and there is plenty of space. We judge that Best closely follows market trends and actively lays out the humanoid robot and automotive screw market while firmly laying out industrial mother machines. Currently, it is progressing smoothly, which is expected to further open up room for growth in performance.

Profit forecasting and investment advice. We expect the company's net profit to be 0.314/0.418/0.535 billion yuan for 2024-2026, respectively, and EPS of 0.63/0.84/1.07 yuan respectively. Referring to the valuation levels of companies in the same industry, considering that industrial mother machine-related products are expected to open up a new growth curve, we will give them 26-31 times PE in 2025, corresponding to a reasonable valuation range of 21.84 to 26.04 yuan, maintaining the “superior to the market” rating.

Risk Alerts

The automobile industry is declining in prosperity;

Production and sales of new energy vehicles fell short of expectations;

Prices of raw materials fluctuate greatly;

The development progress of new products and new customers fell short of expectations.