Incident: On January 26, 2023, the company released the 2023 annual performance forecast. The performance forecast shows that in 2023, the company achieved net profit of 0.2 to 0.3 billion yuan, a year-on-year decrease of 81.81%-72.72%. Net profit without deducted return to mother was 0-0.1 billion yuan, and net profit without deducted return to mother in 2022 was a loss of 612 million yuan.
The amount of non-recurring profit and loss was small in 2023, the amount of non-recurring profit and loss in 2022 was large, and net profit to mother declined year-on-year: (1) The company lost a significant impact on Jiangsu Kangzhong in the first quarter of 2022. According to the long-term equity investment requirements of corporate accounting standards, the company changed its accounting treatment. Prior to the change, the company reported Xinkangzhong's shares according to long-term equity investments and measured according to the Equity Law. After the change, the company designated Xinkangzhong's shares as financial assets measured at fair value and changes included in current profit and loss. They were reported according to other non-current financial assets, and subsequent measurements were carried out according to fair value. (2) On March 29, 2022, the company sold 100% of the shares of Hangzhou Jingu Environmental Protection Equipment Technology Co., Ltd.
(3) The amount of impairment reserves accrued during the reporting period decreased compared to the same period of the previous year. Combined with the above factors, the company's non-recurring profit and loss was drastically reduced in 2023.
The company launched Avatar wheels and entered the new energy lightweight circuit: After years of research and development, through innovation in key processes, equipment, molds and materials, the company launched a new lightweight product, Avatar low-carbon wheels, at the end of 2020, and established high technical barriers in terms of process, equipment, molds, and materials.
Avatar low carbon wheels are a revolutionary lightweight product. The product has the characteristics of novel appearance, light weight, high precision, high strength, better balance, stronger deformation resistance, more durability and higher cost performance. It also has the advantages of traditional steel wheels and aluminum alloy wheels, and can replace traditional steel wheels and seize part of the aluminum alloy wheel market. As the penetration rate of new energy continues to increase and the demand for lightweighting continues to rise, the company's Avatar low-carbon wheels rely on their advantages to position themselves on the new energy circuit.
Targeted production capacity continues to expand, and the company's revenue and performance are expected to continue to increase in the future: the company will continue to receive Avatar wheels from 2022 to 2023. Key customers in the passenger car sector include BYD, Changan Automobile, SAIC-GM, Zero Sports, etc., and key commercial vehicle customers include Sinotruk and BAIC Foton. The company continues to expand production. The company plans to reach 12, 20, and 30 Avatar wheel production lines in 2024-2026, and the production capacity is expected to reach 12, 20, and 30 million. As the company continues to reap fixed targets and production capacity expansion, the company's revenue and performance are expected to continue to increase in the future.
Profit forecast: The company is expected to achieve revenue of 34.56 billion, 40.60, and 4.644 billion yuan in 2023-2025, net profit of 0.27, 2.15, and 317 million yuan. The 2024-2025 PE is 30.5 and 20.63 times, which is covered for the first time with a “recommended” rating.
Risk warning: Competition in the passenger car industry intensifies, sales fall short of expectations; commercial vehicle sales fall short of expectations; Avatar wheel expansion progress falls short of expectations, etc.