Incidents:
The company disclosed its 2024 quarterly report: the company's 2024 Q1 revenue was 1,485 billion yuan, +22.21% year over year, including auto parts business revenue of 1,323 billion yuan, +23.67% year over year; net profit to mother was 44 million yuan, +25.44% year over year; net profit without deducted net income of 42 million yuan, +36.02% year over year.
Profit levels declined slightly year over year but improved month-on-month. The decline in cash flow was due to normal fluctuations and rising costs in Q1, and gross margin was -0.85 pcts year over year, but thanks to good control over management expenses and financial expenses, the expense ratio was -0.75 pcts year over year, and the net interest rate was -0.43 pcts year over year during the Q1 period. At the same time, the company's profit level improved month-on-month, with gross margin and net margin +0.38pcts and +1.24pcts month-on-month, respectively. In addition, net cash flow from Q1 operating activities was -41.35% year-on-year, mainly due to: (1) increased working capital investment due to growth in the auto parts business; (2) preparing raw materials for a long procurement cycle in advance to cope with subsequent increases in production capacity and increased market demand to enhance the company's product delivery capacity.
The traditional business grew steadily, and the low-altitude economy business started. On the one hand, the majority shareholders continued to increase their holdings of cockpit parts, driven by domestic demand for mid-range and high-end car replacement. The penetration rate of intelligent products such as optoelectronic touch surfaces and electric air vents in clients continued to increase. At the same time, orders from leading overseas NEV companies began mass production and steadily increased production capacity, and the growth momentum continued to expand. Demand for new energy charging and distribution products continues to be strong as domestic NEVs continue to grow. At the same time, it has successfully entered the popular low-altitude economy circuit to supply all-in-one charging and distribution products to Xiaopeng Huitian, the leading flying car company. There is also an opportunity to receive orders from other similar companies in the future. Furthermore, after continuously increasing the company's shares to 13.03% in 2023 to become the company's second-largest shareholder, Junsheng Electronics continued to increase its shares by 0.45% in Q1 2024, demonstrating shareholders' confidence in the company's development.
Investment advice and profit forecasting
Benefiting from the steady growth of the cockpit business, as well as the rapid growth support of the charging and distribution business and other new businesses, we expect the company's net profit for 2024-2026 to be 2.03\ 2.43\ 288 million yuan, up 26.39%\ 19.48%\ 18.39% year-on-year, corresponding to EPS 1.54\ 1.84\ 2.18 yuan, based on current stock prices corresponding to 2024-2026 PE 22.19x\ 18.57x\ 15.69x. Maintain the company's “gain” rating.
Risk warning
The risk that the NEV penetration rate falls short of expectations; the implementation of NEV charging and distribution infrastructure falls short of expectations; the risk that competition in the charging and distribution business increases the risk; the risk that the transformation of the cockpit parts business falls short of expectations; the risk that the balance equipment business shrinks beyond expectations; and the risk that the integration of the Junsheng Qunying business exceeds expectations.