The performance was in line with expectations. In 2023, revenue was 4.625 billion yuan, up 36.7% year on year; net profit to mother was 609 million yuan, up 35.3% year on year; net profit after deducting non-return to mother was 573 million yuan, up 32.5% year on year. Revenue for the fourth quarter was 1,431 billion yuan, up 48.6% year on year, up 16.1% month on month; net profit to mother was 154 million yuan, up 73.4% year on year, down 14.4% month on month; net profit after deducting non-return to mother was 141 million yuan, up 43.2% year on year, down 18.4% month on month. Revenue for the first quarter of 2024 was 1,417 billion yuan, up 55.2% year on year; net profit to mother was 219 million yuan, up 66.2% year on year; net profit after deducting non-return to mother was 200 million yuan, up 62.4% year on year. In 2023, the company plans to distribute a cash dividend of 6 yuan for every 10 shares to all shareholders.
Gross margin was under pressure in the fourth quarter, and gross margin remained stable in the first quarter. The gross profit margin in 2023 was 29.6%, down 3.3 percentage points year on year; the gross profit margin for the fourth quarter was 26.8%, down 1.5 percentage points year on year and 3.8 percentage points month on month. The decline in gross margin was mainly due to increased raw materials and labor costs. The gross profit margin for the first quarter of 2024 was 32.0%, up 0.7 percentage points year over year. The cost rate for the full year of 2023 was 15.9%, down 1.6 percentage points year on year. Among them, the financial expense ratio increased 0.5 percentage points year on year, and the R&D expense ratio decreased 1.5 percentage points year on year, mainly due to exchange rate changes and a sharp increase in revenue. The fee rate for the first quarter of 2024 was 15.9%, down 1.6 percentage points year over year.
Net cash flow from operating activities for the full year of 2023 was $432 million, up 4104.8% year on year, mainly due to increased revenue, increased repayment, and low year-on-year base; net cash flow from operating activities in the first quarter of 2024 was 154 million yuan, down 1.6% year on year.
New and old businesses have developed collaboratively, and customer expansion has achieved remarkable results. In 2023, the company's old and new businesses continued to grow steadily, with revenue increasing by 29.4% year on year; new businesses such as chassis controllers and domain control products continued to expand, and revenue increased 552.3% year on year; energy management products grew rapidly, and revenue increased 246.9% year on year, accounting for 9.6% of main business revenue, up 5.8 percentage points year on year. In 2023, the company received 73 new designated projects, including 10 global projects; the company has a total of 145 ongoing research projects, including 17 global projects. The company's early layout began to pay off. New customers such as Ideal and BMW increased by 338.1% year-on-year. In the future, it will focus on expanding the international business of other global customers such as Toyota, Stellantis, GM, and Honda.
Optimize product structures and promote internationalization strategies. The company will continue to optimize the product structure, focus on higher value products such as efuse, regional controllers, central gateways, etc., strengthen product system integration capabilities, and strive to increase the average product value by more than 20%. With the goal of expanding global market business, the company established its first overseas production base in Japan in 2023 and officially put into operation before the end of the year; actively preparing to establish a factory in the European and American markets. It is expected to complete related factory construction work by the end of 2024 to provide a guarantee for further development of new customers and new businesses in the international market.
Adjust revenue, gross profit margin, expense ratio, etc., and increase the 2026 forecast. The 2024-2026 EPS is 2.05, 2.68, and 3.39 yuan (originally 2.06 and 2.57 yuan for 24-25), respectively. Comparable companies are companies related to the automotive electronics and new energy vehicle industry chain, 38 times the company's average valuation of PE in 24, and the corresponding target price is 77.9 yuan, maintaining the purchase rating.
Risk warning
The lighting control business volume fell short of expectations, the motor control business fell short of expectations, the on-board electrical appliances and electronics business fell short of expectations, and the passenger car industry sales volume fell short of expectations.