Description of the event
The company released its 2023 annual report and 2024 quarterly report. In 2023, it achieved revenue of 3.106 billion yuan, a year-on-year decrease of 2.95%; net profit to mother was 138 million yuan, a year-on-year decrease of 6.49%; and net profit after deducting non-return to mother was 123 million yuan, an increase of 29.07% year-on-year. 23Q4 achieved revenue of 589 million yuan, a year-on-year decrease of 14.41%; net profit to mother was 0.15 million yuan, up 165.01% year on year; net profit after deducting non-return to mother was 121 million yuan, up 197.10% year on year. 24Q1 achieved revenue of 773 million yuan, a year-on-year decrease of 4.60%; net profit to mother was 38 million yuan, a year-on-year decrease of 5.84%; net profit after deducting non-return to mother was 34 million yuan, an increase of 14.28% year-on-year.
Incident comments
Performance is under pressure in the short term. The company's revenue declined slightly year-on-year due to the sentiment of the manufacturing industry, wind power installations falling short of expectations, compounded by industrial chain customer digestion inventory, etc. By product, the company's bearing product revenue accounts for about 59% of the main business revenue, and the main business is still prominent. Among them, the revenue of finished bearing products maintained a good growth trend; the revenue of automobile airbag gas generator parts maintained rapid growth; the company's auto parts and thermal management system parts revenue remained flat; the bearing ring business has been affected by adverse factors such as European geopolitics and rising energy prices since the second half of 2022. Revenue for the second half of 2022 and the first three quarters of 2023 has declined year-on-year, and improved since the fourth quarter of 2023; due to wind power Downstream inventory removal, insufficient demand, and increased competition, wind power roller revenue fell short of expectations.
Finished bearing products have made breakthroughs in the automotive industry, especially in the NEV industry. Most of the company's finished bearing products are second-tier suppliers to automotive OEMs. They provide products to first-level suppliers of automotive OEMs, and then sell them to OEMs after assembling them into system products. In 2023, the company's ball ring needle roller bearings were provided indirectly to leading domestic independent brands and new car builders through first-level suppliers, and deceleration system bearings were indirectly supported by another leading domestic independent brand and new car builder through first-level suppliers, and helped advance the company's NEV drive motor bearing project; the third-generation automobile wheel bearing unit production line successfully passed the audit of well-known domestic mainframe OEMs and obtained targets for new projects. At the same time, the company is also actively promoting the development of automotive aftermarket marketing channels, contacting relevant domestic and foreign companies. Various cooperation methods increase the production and sales of the company's third-generation automobile wheel bearing units.
Accelerate the pace of global resource allocation. In 2021, the company completed the merger and acquisition of FLT, an important supplier of European transmission bearings and industrial motor reducer bearings. In 2023, the company strengthened integration and collaboration with FLT to gradually increase the FLT Group's internal procurement share; increased investment in Mexico on the five continents; at the same time, strengthened internal outreach and multiple measures to develop the North American market, and gradually establish and continuously improve the international cycle of the company's business.
Platform-based expansion opens up room for growth. Based on the bearing and precision parts industry chain, the company diversified its products on the basis of core technology relationships, transformed from traditional precision parts to core components for new energy vehicles, wind power rollers, and robot actuators, and has continuously achieved new breakthroughs, entering a new pattern of new energy and artificial intelligence hardware construction. As a platform-based enterprise, the company continues to enrich its product line and has a broad long-term market space.
Maintain a “buy” rating. We expect the company's net profit to be 1.86 million yuan and 227 million yuan respectively in 2024-25, corresponding to the latest PE, 35 and 29 times, respectively, to maintain a “buy” rating.
Risk warning
1. The risk of fluctuations in raw material prices;
2. New product development falls short of the expected risk.