Event: The company released its 2023 annual report and the 2024 first quarter report. For the full year of 2023, the company achieved operating income of 8.074 billion yuan, +18.08% year-on-year, and realized net profit of 816 million yuan, or +40.26% year-on-year. 2024Q1 achieved revenue of 2,075 billion yuan, +15.79% year-on-year. Achieved net profit of 221 million yuan to mother, +29.37% year-on-year.
The gross margin increased, and the overall cost ratio was stable. The company's gross profit margin in 2023 was 22.24%, +1.17 percentage points year over year, and 2024Q1 gross profit margin was 22.65%, +1.88 percentage points year over year. In 2023, the company's sales/management/R&D/finance expenses rate was 1.01%/4.08%/4.75%/0.43%, respectively, -0.01/-0.36/+0.40/ -0.61 percentage points year-on-year. The 2024Q1 sales/management/R&D/finance expenses ratio was 0.94%/3.66%/4.84%/0.47%, respectively, +0.03/-0.53/+0.70/ -0.81 percentage points.
Build overseas production bases and accelerate the international layout. The company accelerates the development of overseas supply chains and the development of sales channels. In 2024, the company will ensure that the construction of the Hungarian production base progresses as scheduled, actively introduce outstanding European talents, strengthen the international level of the team, and lay a solid foundation for the company's further expansion in the global market.
The field of smart home and automotive components is growing rapidly. Using the holding subsidiary Huanduo Intelligent Transmission Co., Ltd. as the carrier, the company actively invests in the research and development of injection molding and related composite gears and small assemblies with the design strength accumulated over many years by the parent company, and has successively increased its market share in the fields of smart homes, vehicle parts, etc., especially in the sweeper industry, which is expected to help the company achieve stable and continuous performance growth in the future.
The market share of RV speed reducers continues to increase. The subsidiary Huandong Technology continues to increase its market share of domestic RV reducers with its R&D capabilities and batch delivery capabilities for robotic precision speed reducers. Using the technical and market synergy of RV reducer products, Environmental Technology's harmonic gearbox products have also been successfully delivered. In order to further consolidate its leading position in the field of precision transmission, the subsidiary team actively organized resources to explore and develop precision speed reducers with new structures, laying a solid foundation to meet the diverse needs of future robots for joints.
Profit forecast and rating: The company's net profit for 2024-2026 is estimated to be 1,079 million yuan, 1,271 billion yuan, and 1,615 billion yuan, EPS of 1.26 yuan, 1.49 yuan and 1.89 yuan respectively, and PE 19.46 times, 16.51 times, and 13.00 times, respectively. Maintain a “buy” rating.
Risk warning: Overseas base construction falls short of expectations; development of new products such as smart homes falls short of expectations.