Core views
For the full year of 2023, we achieved revenue, net profit attributable to mother, and net profit of 71.37 billion yuan, 4.65, and 440 million yuan, respectively, up 26.59%, 22.17%, and 23.60% year-on-year, respectively. The company is a leader in automobile intelligence in China. It has plenty of orders in hand, an increase in the share of new energy orders, and mass production of new products. As the company's new production capacity is launched one after another, the company is expected to show resilience and flexibility in operation. Net profit due to mother in 2024-2025 is estimated to be 650 million yuan and 830 million yuan, respectively. The current stock price corresponds to PE valuations of 25X and 20X, respectively, maintaining a “buy” rating.
occurrences
1) The company released its 2024 quarterly report: in the first quarter of 2024, it achieved revenue, net profit attributable to mother, and net profit of 19.90, 1.42, and 138 million yuan, with year-on-year increases of 51.34%, 83.52%, and 89.26%, respectively.
2) The company released its 2023 annual report: For the full year of 2023, it achieved revenue, net profit attributable to mother, and net profit of 71.37, 4.65, and 440 million yuan, with year-on-year increases of 26.59%, 22.17%, and 23.60%, respectively.
Brief review
Core customer sales rebounded & new customers were further expanded, and revenue increased 26.59% year-on-year in '23. For the full year of 2023, we achieved revenue, net profit attributable to mother, and net profit of 71.37 billion yuan, 4.65, and 440 million yuan, respectively, up 26.59%, 22.17%, and 23.60% year-on-year, respectively.
By business, automotive electronics, precision die-casting, precision electronic components, and LED lighting achieved revenue of 48.26 million yuan, 16.60, 3.98 million yuan, and 126 million yuan respectively, accounting for 67.62%, 23.26%, 5.58%, and 1.77% of revenue, respectively, and +1.20, -0.22, -0.29, and -0.50 pct. Among them, Q4 achieved revenue, net profit attributable to mother, and net profit without return to mother of 23.40, 1.67, and 160 million yuan, up 21.29%, 44.53%, and 44.44%, respectively. The increase in annual performance was mainly due to strengthening support for core customers. The quarterly increase in single-quarter results stemmed from the implementation of new customers and new projects. 1) In 2023, the company's core customers, Great Wall, Changan, Chery, and Geely sold about 6.11 million vehicles, up 25% year on year. The total sales volume in Q4 2023 was about 1.86 million units, up 32% year on year and 13% month on month. 2) Since Q3, the company's new projects have gradually begun, such as the cockpit domain control project in collaboration with Chery, BAIC, and Great Wall, the HUD project supporting the Wenjie M7, Changan Qiyuan, and Geely Krypton, and the LCD instrument project supporting the Wanjie M7. In the first quarter of 2024, we achieved revenue, net profit attributable to mother, and net profit of 19.90, 1.42, and 138 million yuan, with year-on-year increases of 51.34%, 83.52%, and 89.26%, respectively.
Under annual downward pressure, gross margin increased steadily throughout the year, and profitability was further strengthened in Q4. The company's gross profit margin, net profit margin, and period expense ratio in 2023 were 22.36%, 6.58%, and 14.67%, respectively, +0.26, -0.24, and -0.50pct year-on-year, respectively. The automotive electronics business had an annual gross profit margin of 22.05%, and the precision die-casting business had an annual gross profit margin of 26.11%. The annual sales expense ratio, management cost rate, R&D expense ratio, and financial expense ratio were 3.81%, 2.39%, 8.49%, and -0.02%, respectively, which were basically the same. Q4 The company's gross profit margin, net profit margin, and period expense ratio were 22.92%, 7.20%, and 13.18%, respectively, +1.04, +1.13, and -1.36pct, respectively, and profitability improved month-on-month. The company's gross profit margin, net profit margin, and period expense ratio in Q1 in '24 were 21.56%, 7.2%, and 14.14%, respectively, -0.76, +1.23, and -3.22pct.
Automotive electronics and precision die-casting are growing, increasing R&D investment and continuing to transform platform-based suppliers. 1. Automotive electronics: 1) Deepen the breadth and depth of cooperation with existing customers, and significant progress has been made in the international market. In 2023, it broke through new customers such as Volkswagen SCANIA, FAW-Toyota, and SAIC Volkswagen, increased cooperation with existing customers such as Great Wall, Changan, and Chery, and increased the range of products it carried. 2) The cockpit domain control of the company's domestic chip solution achieved mass production; launched light domain control products and obtained multiple fixed-point projects; integrated cabin parking completed technical pre-research and prototyping; launched driving domain control products are participating in project bidding; and pre-research central computing platform solutions. 2. Precision die-casting: 3,500 tons of die-casting equipment have been introduced and a designated project for a three-electric system for new energy vehicles.
Investment advice
The company has plenty of orders in hand, an increase in the share of new energy orders, and mass production of new products. As the company's new production capacity is launched one after another, the company is expected to show resilience and flexibility in operations. We expect net profit from 2024-2025 to be 650 million yuan and 830 million yuan respectively. The current stock price corresponds to PE valuations of 25X and 20X, respectively, maintaining a “buy” rating.