Q1 Profitability improved month-on-month, and profit performance outperformed revenue
Duoli Technology released its quarterly report. In Q1 of 2024, it achieved revenue of 780 million yuan (yoy -5.53%, qoq -33.10%), net profit of 115 million yuan (yoy +7.83%, qoq +4.83%), deducted non-net profit of 110 million yuan (yoy +9.16%), and net operating cash flow of 112 million yuan (year-on-year correction). We expect the company's EPS in 2024-2026 to be 3.33, 4.08, and 4.68 yuan respectively. Comparatively, the company's Wind agreed to expect an average PE value of 14 times in 24, giving the company 14 times PE in 24, and a target price of 46.62 yuan, maintaining a “buy” rating.
Profitability improved markedly year on month. Continuing good cost control and fee reduction performance, 24Q1 gross margin was 23.15% (yoy+0.6pct/qoq+2.6pct), net profit margin was 14.7% (yoy+1.8pct/qoq+5.3pct), profitability improved significantly year on month. The company's comprehensive gross margin fell by 1.31 pct in '23, mainly due to fluctuations in terminal prices, increased depreciation and amortization costs after some of the company's fund-raising projects were put into operation, and 24Q1 gross margin rebounded. We think it may be due to the low 23Q4 base, the rise in production of new projects, the impact of short-term terminal price fluctuations being released, and the company improved product structure and increased cost control. The rate for the 24Q1 period was 6.05% (yoy-0.86pct/qoq+1.86pct). The month-on-month increase was mainly due to an increase in R&D rates and management rates. We believe that in the future, as mass production of the company's projects unleashes scale effects and optimizes internal management, the cost side is expected to be well controlled.
Production expansion and production optimization are being carried out simultaneously. It is optimistic that production capacity will be released and the company's production capacity will gradually increase. It is estimated that full production of stamping parts can support 6 billion yuan in production value. Integrated die castings have already laid out 4 production lines in Jiangsu Yancheng and Lu'an, Anhui, and plans to build new investment projects in Jintan, Jiangsu. We are optimistic about the company's production capacity release to boost performance: Changzhou Daya has invested a total of 123 million yuan in stamping and welding production lines to support ideal cars. The net profit has now risen from 23H1 million yuan to H232 60 million yuan, which is expected to follow in the future Customer production schedules increased and volume increased; for customers such as Tesla/SAIC Volkswagen, the 23H2 profit was 120 million yuan, down more than 23H1, or the company did production line transformation and the customer upgraded production line. After the production line transformation, production automation capabilities were improved, which is expected to increase the profit center; Changzhou Duoli mainly engages in integrated die-cast chassis structural components, and has obtained relevant land and is in the plant construction period; Jinhua Daya was established in March 23 and is in the trial production stage; Anhui Daya lays out 2 6100-ton integrated die-casting production lines, which will later be Meet the needs of NIO and other customers.
Integrated die casting production capacity is planned in an orderly manner. Optimistic that customer production and sales will drive performance performance. The company will enter integrated die casting, plan and release production capacity in an orderly manner, and be optimistic about following the customer's upward production and sales to release profits:
22Q4 Yancheng Duoli's 6100-ton integrated die-casting production line has been put into use; in September '23, Kunshan Daya won the integrated die-casting back bottom plate from the leading domestic OEM. The company expects mass production in 25 years, with sales of 21-23 billion yuan over the entire life cycle; Yancheng Doli's 9200-ton integrated die-casting production line and Anhui Daya plans 2 6100-ton integrated die-casting production lines are all in the installation stage; the company plans to continue to lay out integrated die-casting production lines in Jintan, Jiangsu in the future.
Risk warning: customer development falls short of expectations; downstream demand falls short of expectations; integrated die casting progress falls short of expectations.
