Introduction to this report:
The company's 2023 results are in line with expectations. Demand for the company's downstream automobiles is booming, and the company is actively developing new customers and expanding new processes. The company continues to invest in the main business, and it is expected that the main processing and distribution business will continue to contribute to the increase.
Key points of investment:
Maintain an “Overweight” rating. The company achieved revenue of 9.762 billion yuan in 2023, down 5.61% year on year, and realized net profit of 417 million yuan, up 36.85% year on year. The company's performance was in line with expectations. Maintain the company's 2024-25 net profit forecast of $518/631 million, and add the 2026 net profit forecast of 769 million yuan, corresponding EPS of 1.05/1.28/1.56 yuan. Maintain the company's target price of 15.12 yuan and maintain the “gain” rating.
Actively develop new customers, and the performance increased quarter by quarter. In 2023, the company actively developed new customers, successfully won the bid for BYD's four base plate projects in Fuzhou, Hefei, Changzhou and Changsha, and obtained a self-made sheet material processing project for a model of Ideal Auto Changzhou Branch and became its supplier. Relying on optimizing the customer and product structure, the gross margin of the company's processing and distribution business increased by 0.4 and 3.33 percentage points respectively in 2023. In the 1st to 4th quarter of 2023, the company achieved net profit of 0.85, 0.94, 1.15, and 123 million yuan respectively, and the company's quarterly performance gradually increased.
Continue to expand business growth. On the basis of maintaining the stability of the existing business, the company plans to build new processing bases in Changzhou, Jiangsu, Xi'an, Shaanxi, and Loudi, Hunan in 2024. At the same time, the company invested 1.2 billion yuan to build 5 steel-aluminum mixing processing lines and 5 stamping and welding lines in Wuhu to further expand the increase.
Furthermore, in order to cooperate with downstream automobile customers going overseas, the company will actively study and implement the layout in Southeast Asia in 2024, and the company can be expected to go overseas in the future.
Integrated aluminum die-casting continues to advance. The main 20,000 ton production line for the company's aluminum die-casting project in 2023 is already in place, and samples were delivered downstream in December '23. In 2024, the company will promote the construction of the second phase of the aluminum die-casting project to further expand the aluminum die-casting business.
Risk warning: Demand for automobiles has declined sharply, and raw material prices have fluctuated greatly.