24Q1 revenue increased slightly and performance grew rapidly: Zheng Meiji released the 24Q1 financial report. 24Q1 company achieved revenue of 9.670 billion yuan/ +4.93%, achieved net profit of 1,042 million yuan/ +33.08%, net profit after deducting non-return to mother of 927 million yuan/ +40.66%, and achieved considerable growth in performance. In terms of profit level, 24Q1 gross profit margin was 23.89%, up 2.91 pct year on year, net profit margin to mother 10.78%, up 2.28 pct year on year.

Profit increase in the coal machine sector: According to the 24Q1 financial report, the 24Q1 coal machine sector had operating income of 4.826 billion yuan/ +0.72%, net profit of 1,085 billion yuan/ +32.31%, and net profit to mother of 1,006 billion yuan/ +31.91%. The performance of the coal machine sector was good, mainly due to the high gross margin of products that confirmed revenue during the reporting period.

Overall improvement in the automotive sector: According to the 24Q1 financial report, the 24Q1 auto parts sector had revenue of 4.844 billion yuan/ +9.48%, net profit of 88 million yuan/ +91.71%, and net profit of 36 million yuan/ +77.47%. Among them, the subsidiary ASIMCO's revenue was 1,539 million yuan/ +28.10%, and the net profit was 167 million yuan/ +34.38%. The improvement in ASIMCO's revenue was mainly driven by the increase in commercial vehicle and passenger vehicle sales in the first quarter; the subsidiary SEG's revenue of 3.72 billion yuan was basically the same as 23Q1, with net profit of -29 million yuan, a loss of 0.18 billion yuan from 23Q1. The net profit level of the automotive sector was still low, but there was a marked improvement from 23Q1.

The company achieved good performance growth in Q1. We maintained our forecast for 2024-2026 net profit of 37.0, 43.0, and 4.91 billion yuan, respectively, and earnings per share of 2.07, 2.41, and 2.75 yuan, respectively. Maintaining 11.5 times the company's PE in 24 years, the corresponding target price was about 23.80 yuan, maintaining the purchase rating.

Risk warning

Industry policy changes, commodity price fluctuations, slow investment in coal production capacity, falling short of expectations in automobile consumption, falling short of expectations, development of new energy businesses falling short of expectations, increased competition, risk of exchange rate fluctuations, risk of impairment of goodwill