Incident: The company released its 2023 annual report and 2024 quarterly report. For the full year of 2023, the company achieved operating income of 3.106 billion yuan, -2.95% year over year; net profit to mother was 138 million yuan, -6.49% year over year. 24Q1 achieved operating income of 773 million yuan, -4.60% YoY, +31.22% month-on-month; net profit to mother was 38 million yuan, -5.84% YoY and +145.43%. Performance was in line with expectations.

The bearing business is developing rapidly and has a multi-field layout. In 2023, the company's bearing products business achieved revenue of 1,789 billion yuan, -5.12% year-on-year, gross profit margin of 18.01%, -0.03pct year on year, and shipped 454 million sets of bearing products, -4.40% year-on-year. In terms of automobile bearings, the company has successfully developed a full range of bearing products for new energy vehicles and supplied them to domestic and foreign engine customers. In terms of robot reducer bearings, the company has successfully developed a full range of robot bearing products to support robot reducer companies such as Dalide, Family Harmonics, and Laifu Harmonics.

In terms of industrial bearings, the company's main customers include many companies such as Dana in the US and Nanko Gear in China. With the rapid development of various downstream fields of the company's bearing products, it is expected that the bearing products business will bring profit growth to the company.

The auto zero business targets major customers and is expected to usher in rapid development. In 2023, the company's auto parts business achieved revenue of 430 million yuan, +9.29% year over year, gross profit margin of 19.66%, +1.19pct year on year, and shipped about 49.13 million sets of auto parts, +1.49% year over year. The company's customers in the auto parts sector include Autoliv of Sweden, Joyson Electronics and BYD in China, all of which are leading companies in the industry. The company has obtained major customer resources, and the rapid development of the automotive industry in recent years will continue to benefit the development of the company's auto parts business.

Layout screw products, and the robot screw track has a large space. Relying on the technical advantages of precision parts manufacturing and processing throughout the entire industry chain, the company lays out screw products. Currently, the company's screw products include trapezoidal screws, ball screws, and planetary roller screws. Ball screws are expected to be used in industries such as automobiles and machine tools, while humanoid robots will use trapezoidal screws and planetary roller screws. Screws require high accuracy and carrying capacity. Currently, the company's trapezoidal screws and planetary roller screws are being continuously sampled. The robot track has a large space and is expected to bring room for future growth for the company.

Investment advice: The company's net profit for 24-26 is estimated to be 1.93/2.44/295 million yuan, +39.8%/26.1%/21.1% year-on-year, and EPS of 0.52/0.66/0.80 yuan, respectively, maintaining the “buy” rating.

Risk warning: wind power installed capacity falls short of expectations, capacity construction progress falls short of expectations, etc.