Key investment points: 23 The full year achieved operating income of about 3,691 billion yuan, +6.0% year on year; net profit to mother was about -204 million yuan, -237.0% year over year; after deducting non-return to mother, approximately -237.0%; after deducting non-return to mother, about -234 million yuan, or -327.2% year on year. 24Q1 achieved operating income of about 848 million yuan, +26.9% year on year; net profit of about 26 million yuan, +17.1% year over year; deducted from non-return mother about 0.14 million yuan, or -22.8% year on year.

Losses were significant in '23 due to product delivery and asset impairment, and improvements were made in 24Q1. In '23, the company achieved revenue of 3,691 billion yuan, +6.0% year on year; net profit after deduction of 204 million yuan, -237.0% year on year; net profit after deduction of non-return to mother - 237.0%; net profit after deducting 234 million yuan, 327.2% year on year. The decline in the company's profit was mainly due to poor delivery of products in the NEV motor electronic control parts business that fell short of expectations and calculated significant asset impairment. By business segment, the intelligent equipment business had revenue of 2,936 billion yuan, +22.6% year on year; revenue of electric control components for electric motors for new energy vehicles was 691 million yuan, -16.2% year over year. 24Q1 achieved revenue of 848 million yuan, +26.9%/-37.1% year on month; net profit to mother of 0.26 million yuan, +17.1%/+122.1% year on month; net profit after deducting non-return to mother of 0.14 million yuan, -22.8%/+111.0% year on month.

24Q1 gross margin increased month-on-month, and profit improvements gradually became apparent. In '23, the company achieved a gross profit margin of 12.0%, -5.8pct year on year. Looking at the specific business segment, the gross profit margin for the intelligent equipment business was 14.1%, -6.3pct year on year. The gross profit margin for new energy vehicle motor electronic control components was 2.1%, -7.6pct year on year, and capacity utilization declined due to declining revenue and new capacity investment. Meanwhile, 24Q1 achieved a gross profit margin of 14.2%, -3.7 pct/+5.0 pct compared to the same period last month, and gross margin improved month-on-month. In terms of expenses, the company's total four-year expenses in '23 were 14.8%, compared to +1.6 pct. Of these, the R&D cost rate was +1.4pct. R&D investment continued, and some projects had not yet been mass-produced, resulting in a mismatch between cost and revenue. Meanwhile, the total of the 24Q1 company's four fees was 13.6%, -3.2pct/+0.9pct compared to the same period last month. The scale effect and cost control effect gradually became apparent.

Focus on large customers and large-scale mass-produced products, and shift from scale growth to high-quality development. Subsequent companies will implement the concept of “big customers, big projects, big products”, and focus on expanding the battery business in terms of intelligent equipment business. The products cover the field of semi-solid batteries. Projects from well-known customers such as NIO, Ideal, BYD, Geely, Tesla, and Xiaopeng account for more than 75% of revenue. By the end of '23, the company had orders of 5.69 billion yuan for intelligent equipment; in terms of motor electronic control, customers include VF, Changan, Geely, Chery, JAC, etc. Furthermore, the company actively expanded the international market and achieved a major breakthrough for Volvo Cars. Looking ahead, the company will continue to optimize its customer and product structure, improve the level of refined project management, reduce costs and improve efficiency, which is expected to drive both the company's scale and profitability.

The profit forecast was lowered to the “Overweight” rating. Considering the low gross profit project delivery pace of the company's equipment business, the impact on the company's revenue and profitability due to factors such as sales volume falling short of expectations, revenue and production capacity mismatch, etc., we lowered the company's 2024-2025 net profit forecast to 1.19/193 million yuan (previous value was 4.67/618 million yuan) and added 251 million yuan for 2026, with a year-on-year reversal of 62.2%/30.2%, corresponding to the current PE of 28/17/13 times. Referring to comparable companies (Huichuan Technology, Ruihu Mold, Engbol) 2024, the average PE is 33 times. Considering the strategic characteristics of “two-wheel drive” of the company's equipment and electronic control components for motors, profits are expected to continue to improve with subsequent cost reduction and efficiency management improvements, and mass production of important fixed-point projects such as ideal, so it was lowered to an “increase in weight” rating.

Core risks: risk of exchange rate fluctuations, risk of fluctuations in raw materials and freight costs, new business development falling short of expectations. The company received the “Supervisory Work Letter on Anhui Juyi Technology Co., Ltd.” from the Shanghai Stock Exchange on April 26. Please pay attention to the relevant risks.