Items:
The company released the third quarterly report of 2023, with revenue of 420 million yuan in the first three quarters,+19% year-on-year, and net profit of 135 million yuan,+20% year-on-year.
Comments:
The company's 3Q23 earnings performance is still under pressure. The company's 3Q single-quarter revenue was 150 million yuan,-2% year-on-year and +6% month-on-month. The month-on-month growth rate was lower than that of domestic passenger cars, mainly dragged down by overseas business plate. The estimated performance of domestic customer business conforms to the production and sales status of customers. The net profit attributable to the parent company was RMB 41 million yuan,-12% year-on-year and-10% month-on-month; the net interest rate was 28.2%,-4.2PP year-on-year and-4.8PP month-on-month, mainly affected by the month-on-month decrease of gross profit rate and the decrease of exchange income. Gross profit margin was 51.3%,-0.9PP year-on-year and-3.1PP month-on-month, which was estimated to be mainly caused by fluctuations in product structure. The management sales research expense ratio was slightly affected by the slight increase in revenue and decreased by 1.5PP month-on-month, but due to the 2Q exchange income, the 3Q financial expense ratio was 1.2%, year-on-year +3.2PP, month-on-month +6.8PP, affecting the net interest rate.
The malleability of cold forging technology is expected to be further demonstrated, and the category expansion in the field of new energy is expected to lead to a substantial increase in the value of the company's bicycles / gross profit, bringing the third major development for the company.
No matter fuel vehicles or electric vehicles, whether safety parts or non-safety parts, all kinds of metal parts, especially precision metal parts, are inseparable from all kinds of metal parts. compared with the traditional machining process, the cold forging process of the new coordinate has more significant quality and cost advantages. In the context of the rapid increase in new energy penetration, the company has also accelerated the layout of new energy and new product development in recent years.
Previously, the company has announced the establishment of a subsidiary to enter the automobile CO2 heat pump system and thermal management integration module and related valve R & D and manufacturing, the value of the bike will rise from about 150 yuan to several thousand yuan. Among them, the total bicycle value of valve parts is expected to reach 1000 yuan + / six times higher than the transmission group products, and we estimate that the gross profit per bike is expected to reach 300 yuan / 2 times higher than the traditional group products +; the system module integrated bicycle value is expected to reach 6000 yuan + / increase 39 times, the gross profit per bike is expected to reach 900 yuan / increase 9 times. At present, the company's CO2 heat pump system and thermal management integrated module products have completed the design and development and sample manufacturing, are actively promoting the landing of the project.
In addition, the company is also actively stocking the research and development of other metal parts in the field of new energy, including precision parts of lithium batteries. Although the pace of product research and development is uncertain, the cost advantage brought by the cold forging technology itself and the company's excellent ability to customers can be realized with high probability. If these new products can be landed one by one, it is expected to promote the company's bicycle value and gross profit to increase significantly compared with the current, bringing the third major transformation and development for the company.
Investment suggestion: In combination with the financial report, we will revise the revenue and gross profit rate forecast accordingly, and adjust the net profit of the company from 2023 to 2025 from RMB 200 million, RMB 250 million and RMB 320 million to RMB 180 million, RMB 220 million and RMB 280 million, with a year-on-year growth rate of 13%, 25% and 25%, corresponding to 16 times, 13 times and 10 times of the current PE valuation. The company's future growth outlook is still based on the development of product categories relying on cold forging technology, especially in the new fields of thermal management and lithium batteries, which is expected to bring new growth opportunities to the company. With reference to the historical valuation of the Company and the valuation of industry sectors, considering the strong technical competitiveness of the Company and the gradual enhancement of diversified business growth expectations, the target PE valuation for 2023 shall be maintained at 20 times, the target price shall be adjusted accordingly to 26.0 yuan, and the rating of "strong push" shall be maintained.
Risk tips: Volkswagen's domestic performance is low, BYD's production and sales are lower than expected, overseas factory climbing progress is lower than expected, and new product development progress is lower than expected.