Incident: On November 6, the company issued a targeted announcement. The company recently received a fixed-point notice from a leading new energy vehicle OEMs. The company will develop Avatar low-carbon wheel products for its new energy vehicles as a parts supplier for its customers. In addition, from July to October 2023, the company was selected for Avatar wheel projects several times.
The company's Avatar low-carbon wheels have the advantages of both the affordability of steel wheels and the light weight of aluminum wheels: Avatar low-carbon wheels have the advantages of light weight and low cost, and can replace traditional steel wheels and seize part of the aluminum alloy wheel market. Due to the heavy weight and high comprehensive cost of new energy vehicles, the requirements for vehicle weight reduction and cost are constantly increasing. With its advantages, Avatar's low-carbon wheels are on the commercial vehicle+new energy vehicle track. The company focuses on Avatar's low-carbon wheels, rapidly expanding production capacity to meet market demand, and the transformation results are clear.
Recently, the company has continued to receive orders. Passenger cars have made rapid breakthroughs, and commercial vehicles have blossomed simultaneously: the company sold about 1 million Avatar wheels in 2022, mainly commercial vehicle customers. The main customers are Foton Daimler Auman, BAIC Heavy Truck, SAIC Motor Hongyan, and BYD New Energy Light Trucks. In the second half of 2022, the company began supporting the supply of passenger car customers. In 2023, the company continued to receive orders from many leading new energy OEMs, including BYD, Chery, Zero Run, Changan, etc., and the customer structure continued to be optimized. We believe that with the launch of targeted new models, the company's Avatar wheels are expected to bring explosive growth, and shipment volume is expected to accelerate. We expect the company's wheel production and sales to increase by 400%.
Avatar's wheel production capacity is expected to be released rapidly, and profitability is increasing simultaneously: Currently, the company has 2 Avatar low-carbon wheel production lines in Fuyang District, Hangzhou, with a production capacity of 2 million, which is already in normal production; the company's 2 million Avatar low-carbon wheel production base in Hefei held a commissioning ceremony on June 28; the company's 1 million Avatar low-carbon wheel production base in Nanning held a commissioning ceremony on July 31. Subsequent companies are also planning to build new Avatar low-carbon wheel production line bases in or around major OEMs. It is expected that production capacity will continue to double in 2024 and 2025, and the scale effect will continue to increase profits rapidly.
Profit forecast and valuation: We expect the company to achieve revenue of 35.36, 45.67, and 6.239 billion yuan in 2023-2025, and net profit of 0.32, 1.81, and 369 million yuan in net profit from 2023-2025. The PE corresponding to the closing price of November 16, 2023 is 247, 44, and 21 times, respectively.
Risk warning: Passenger car sales, NEV sales, and policy incentives fell short of expectations.