Incident: Bethel released its 2023 annual report. During the reporting period, the company achieved revenue of 7.474 billion yuan, +34.93% year over year; net profit to mother was 891 million yuan, +27.57% year over year; net profit after deducting non-return to mother was 855 million yuan, +36.78% year over year. 23Q4's revenue reached 2.368 billion yuan, or +27.68%/+17.78%, respectively; 23Q4's net profit to mother reached 297 million yuan, or 34.46%/+23.95%, respectively.
Rapid sales growth boosts the company's performance. During the reporting period, the company achieved revenue of 7.474 billion yuan, +34.93% year-on-year, mainly due to a significant increase in orders. Among them, sales volume of intelligent electronic control products were 3,722,800 sets, sales volume +48.93% YoY; sales volume of 2.887 million sets of disc brakes, sales volume +26.55% YoY; and sales volume of 10.1905 million units of lightweight brake components, +31.32% YoY. The company's main business in 2023 was the auto parts business, with a gross margin of 20.21%. By product, gross margin was 21.22% for mechanical braking products, 20.14% for intelligent electronic control products, 13.67% for mechanical steering products, and 20.24% for other products.
The customer expansion was comprehensive, 319 new fixed items were added, and there were sufficient orders in hand. Currently, the company's domestic and foreign customers cover a full range of international and joint ventures: GM, SAIC-GM, Changan Ford, Volvo, Jiangling Ford, Jiangling Renault, Dongfeng Nissan, Stellantis, Ma Hengda, Ford, TATA, Rebuild, etc. Domestic customers: Chery, Geely, Changan, SAIC, BAIC Group, Dongfeng Group, GAC Group, JAC, Great Wall, BYD, FAW Hongqi, Ideal, NIO, Xiaopeng, Cyrus, Changan Deep Blue, Changan Kaicheng, Zero Run, etc. The total number of new fixed projects added in 2023 is 319. The details of the new projects are as follows: Disc brakes: 137 new fixed projects were added, including 45 new energy models. Lightweight products: 37 new targeted projects have been added, including 23 new energy models.
Electronic electronic control products: ① EPB: 47 new designated projects were added, including 33 new energy models.
② ESC: Added 3 designated projects, including 2 new energy models. Intelligent driving products: ① WCBS: 50 new designated projects have been added, including 42 new energy models. ② ADAS: Added 17 fixed-point projects, including 5 new energy models. Steering system products: ① EPS: 8 new fixed projects have been added, including 7 new energy models. ② MSG: Added 11 designated projects, including 5 new energy models. ③ Mechanical steering column: 10 new fixed-point projects have been added, including 5 new energy models. We believe that the company's current perfect customer structure and targeting situation will help the company achieve steady and continuous growth.
Keep abreast of the development trend of lightweighting and new energy sources, and accelerate the expansion of production capacity. Combined with forecasting the future development of new energy vehicles and the company's international business layout, the company continued to accelerate production capacity construction. As of December 2023, the main production capacity layout was as follows: ① adding 500,000 sets/year EPB caliper assembly capacity; ② adding 350,000 sets/year WCBS valve body machining capacity; ③ adding 600,000 sets/year AC6 actuator assembly capacity; ④ adding 750,000 sets/year of fixed clamp assembly capacity; ⑤ adding 270,000 sets/year fixed clamp assembly capacity; ⑥ adding 420,000 sets/year to add 36 new production capacity 10,000 sets/ ⑦ Annual WCBS assembly assembly production capacity; ⑧ 100,000 new sets/year fixed clamp machine plus production capacity; ⑨ 12 new differential pressure casting machines+3 low pressure casting machines, 49 new 5-axis machining centers; ⑩ 1 new EPB rear clamp machine processing production line; 15 additional steer-saving production lines, which have been put into batch production; 7 new steering and saving production lines have been added. In addition, construction of the company's Mexican production site began in 2021, and the first phase of the project with an annual production capacity of 4 million lightweight component products was put into operation at the end of the third quarter of 2023. Based on the orders already received from North American and European customers and the prediction of market trends, the company is implementing the second phase of the expansion project to increase production capacity at the Mexican production site. Through localized layout, the Mexican production base shortens the production cycle for North American customers and enhances customer service levels, which is conducive to further deepening customer partnerships and developing more international customers. Currently, there is strong demand for overseas supply of lightweight components and EPB products. In the future, the company will consider deploying in other regions overseas, accelerate the expansion of overseas production capacity, and further serve and expand overseas customers.
Investment advice: The company's customer coverage is comprehensive, targeted projects continue to grow, and domestic and overseas production capacity is expanding at home and abroad at an accelerated pace. NOA's redefinition of smart cars catalyzes the acceleration of ADAS expansion, and wire-controlled chassis with smart electric Dongfeng is expected to usher in huge development. We expect the company to achieve revenue of 99.04/126.81/16.032 billion yuan in 2024-2026, +32.51%/28.05%/26.42% year-on-year; achieve net profit of 12.10/15.84/19.89 billion yuan, +35.74%/30.88%/25.59%, corresponding to the current PE valuation of 20/15/12 times, respectively, and maintain a “buy” rating.
Risk warning: breakthroughs in wire control technology fall short of expectations, intelligent penetration rate falls short of expectations, overseas production capacity construction falls short of expectations, fluctuations in raw material prices exceed expectations, and downstream OEM sales fall short of expectations