Incident: The company released the 2023 annual report and the report for the first quarter of 2024. The company achieved operating income of 56.097 billion yuan for the full year of 2023, +20.78% year over year; realized net profit of 909 million yuan, +1262.27% year over year, after deducting net profit of 451 million yuan without return to mother, +247.14% year over year. In Q1 2024, revenue of 12.87 billion yuan was achieved, -14.05% year-on-year, and net profit to mother was 256 million yuan, or -13.96% year-on-year.
Cost reduction and efficiency and improved profitability in the export business: sales volume of 631,000 vehicles (including Foton Daimler) was achieved in the full year of 2023, +37.14% year over year, and the market share reached 15.7% in 2023, +1.7 pct year on year.
In 2023, NEV sales exceeded 40,000 units, +84% year over year; exported 131,000 units, +49.1% year over year, a record high, ranking first in China's commercial vehicle exports. Cost reduction and efficiency of the entire value chain progressed. The gross profit margin in 2023 was 11.38%, the same year on year. The gross margin of the heavy truck business was +7.56pct year on year, showing impressive performance. The gross profit margin of export was 16.72%, +3.81 pct year on year, becoming the main source of profit for the vehicle business; the 24Q1 gross profit margin was 11.62%, +0.57 pct year on year. The sales expense ratio declined, and R&D investment increased. The sales expense ratio, management fee rate, and R&D expense ratio in 2023 were 3.81%/2.74%/3.71%, respectively, -0.04/-0.46/+0.28pct. The 24Q1 sales expense ratio, management cost rate, and R&D expense ratio were 3.32%/3.01%/4.26%, respectively, -0.43/+0.19/+1.44pct.
Accelerate the development of new energy sources and strengthen the overseas strategy: in terms of new energy, adhere to the parallel development of the three technology routes of pure electricity, hybrid and hydrogen fuel, complete the upstream core component industry layout and marketing ecosystem, quickly promote new energy products, focus on promoting new energy sales scale growth in pilot cities in the public sector; supplement oil-to-electricity platform products, increase product market coverage, accelerate the development of new platform products, and launch new platform products in 2024. In terms of exports, the company strives to break through high-end markets such as Europe, Japan, Australia and New Zealand, and build a high-end commercial vehicle brand, which is conducive to further increasing profits.
Investment advice: We expect the company to achieve net profit of RMB 1,349/16.05/17.66 billion in 2024-2026. The corresponding PE was 15.96/13.41/12.19 times, respectively, maintaining the “gain” rating.
Risk warning: The commercial vehicle boom falls short of expectations, exports fall short of expectations, and the risk of a downturn in the macroeconomy.