Event: The company released its 2023 annual report. In 2023, it achieved revenue of US$4.207 billion, a year-on-year increase of 17.4%, and achieved net profit of US$37 million, a year-on-year decrease of 36.7%.
The demand environment has improved, and orders continue to grow: The company's revenue growth has mainly benefited from the improved demand environment and the increase in automobile production in the operating regions. In terms of revenue contributions by region, North America's revenue was 2.259 billion US dollars, up 0.5% year on year, Asia-Pacific revenue was 1,225 million US dollars, up 25.9% year on year, and European and South American revenue was 726 million US dollars, up 17.2% year on year. Strong growth in the Asia Pacific region led to an upward trend in revenue. By product, electric power steering (EPS) achieved revenue of US$2,861 billion, up 9.3% year on year; steering column and intermediate shaft (CIS) achieved revenue of US$379 million, up 2.6% year on year; hydraulic power steering (HPS) achieved revenue of US$168 million, up 1.2% year on year; and power transmission system (DL) achieved revenue of US$799 million, up 16.5% year over year. In terms of orders, the company's order volume continued to grow in 2023. In 2023H1 received a total of $2.8 billion in orders, and H2 received orders of $3.3 billion. By product, electric power steering (EPS) products account for 81%, CIS (CIS) products account for 11%, and driveline (Driveline) products account for 8%; regionally, the North American market accounts for 59%, and the Asia-Pacific market accounts for 30%; 20% of total revenue comes from orders from Chinese automakers.
The company's newly acquired business is booming, with the largest proportion of projects implemented in the Asia-Pacific region: in 2023, the company successfully put into operation 55 new customer projects. By region, North America accounts for 13 projects; Europe, Africa, the Middle East and South America received 3 projects, and the remaining 39 projects were all in the Asia-Pacific region; by business line, of the 32 projects put into operation, 53 were newly acquired by the company and 2 were existing businesses; by energy type, 34 projects were electric vehicle (EV) projects put into operation for customers.
Investment advice: We expect the company to achieve net profit of US$147/1.95/231 million in 2024-2026. The corresponding PE was 9.30/7.03/5.91 times, respectively, maintaining the “gain” rating.
Risk warning: global demand for automobiles weakens; raw material prices remain high; freight rates have risen sharply.