Description of the event
Bethel released its 2023 annual report: The company achieved revenue of 7.47 billion yuan, an increase of 34.9% over the previous year. Net profit attributable to mother was 890 million yuan, up 27.6% year over year.
Incident comments
Benefiting from the boom in downstream customers and the volume of new business, the company's revenue grew relatively well. The production and sales performance of the company's major downstream customers was good in the fourth quarter. In Q4, the wholesale sales volume of passenger cars was 7.884 million units, up 14.9% month-on-month and 20.0% year-on-year. Benefiting from the continuous development of the company's market, the increase in production and sales of downstream customers and the release of new projects, combined with the release of products such as intelligent electronic control products (EPB, EPS, WCBS), ADAS, mechanical braking products, and lightweight chassis structural parts, etc., drove the company to achieve better growth in Q4. The company achieved revenue of 2.37 billion yuan in 2023Q4, up 17.8% month-on-month and 27.7% year-on-year. The overall performance was superior to downstream. By product, the revenue from mechanical braking, intelligent electronic control, and mechanical steering in 2023 was 33.7, 33.0, and 480 million yuan respectively. The first two increased 26.5% and 38.8% year-on-year. By region, domestic revenue in 2023 was 6.35 billion yuan, up 39.8% year on year, and overseas revenue was 870 million yuan, up 6.1% year on year.
The company's product structure continues to be optimized, and the profit level continues to rise. In terms of profit, benefiting from the further increase in the revenue share of electronic electronic control products, the company's gross margin continued to increase. The gross margin of 2023Q4 reached 23.1%, an increase of 0.5 pct over the previous month, and a slight decrease of 0.2 pct over the previous year. On the cost side, the 2023Q4 company's cost rate during the period was 8.6%, flat from month to month, down 0.7 pct year on year. The year-on-year decline mainly benefited from the scale effect of revenue growth to lower the R&D cost rate. The 2023Q4 R&D cost ratio was 6.1%, up 0.4 pct month-on-month, and down 1.1 pct year over year. In summary, 2023Q4 achieved net profit to mother of 300 million yuan, an increase of 23.9% over the previous year and a year-on-year increase of 34.4%, corresponding to a net profit margin of 12.5% to mother, an increase of 0.6 pct over the same period last year.
Looking ahead to 2024, the company's new product release will accelerate, production capacity will continue to be forward-looking, and future performance is expected to continue to grow. 1) Products: In 2023, the company added 319 fixed projects, including 66 linear control projects under development, 50 fixed projects, and 25 new mass production projects. At the same time, the company's WCBS1.5 technology platform has completed design, development and performance testing. WCBS2.0, a line control system with redundant braking functions, has completed research and development work on electromechanical braking (EMB). The first EMBA wheel was produced in August 2023, and winter testing and verification has been carried out. Revenue and profit are expected to grow rapidly as new projects and products are launched. 2) Production capacity: The company's production capacity continues to expand. The company publicly issued convertible bonds to raise capital to invest in production capacity. It has completed a 40,000 ton cast iron auto parts production line, and construction of the second phase of the Mexican project has begun. The company is in a period of rapid expansion of production capacity. The capital expenditure in 2023 was 1.03 billion yuan, an increase of 69.9% over the previous year. Revenue continued to grow to absorb depreciation and amortization pressure. Depreciation and amortization accounted for about 3.0% of revenue in 2023, which is basically the same as the previous year, and the company's profit will increase further as production capacity is released.
The company's chassis electronics have taken a multi-pronged approach, and overseas progress is progressing smoothly. I am optimistic that the company will become a global chassis platform enterprise. In the short term, benefiting from lightweighting and the expansion of EPB production and the continuous improvement of fixed targets, it is expected to help performance grow more rapidly. Looking at the medium to long term, the company's chassis electronics are taking a two-pronged approach, and overseas progress is progressing smoothly. The profit level is expected to continue to rise as domestic and foreign production capacity is released. I am optimistic that the company will become a global chassis platform enterprise. Net profit due to mother for 2024-2026 is estimated to be $12.2, 16.01, and 1.96 billion yuan. Corresponding PE is 19.8X, 15.0X, and 12.4X, respectively, maintaining a “buy” rating.
Risk warning
1. The downstream sales volume of the industry falls short of expectations;
2. Profitability is under pressure due to rising raw materials.