Incident: The company released its 2024 semi-annual performance forecast on July 1, 2024. The company expects to achieve net profit attributable to owners of the parent company of 88 million yuan to 95 million yuan in the 2024 half year, an increase of 63.63% to 76.65%; net profit attributable to owners of the parent company after deducting non-recurring profit and loss is expected to be 86.5 million yuan to 93.5 million yuan, an increase of 65.68% to 79.06% year on year.
Customer orders continued to break through, and the company's revenue grew steadily. The company actively follows the new energy vehicle strategy of its core customers. In 2023, 8 frameless seals, including the Intelligent S7, S9, Lynk & Krypton 001, Extreme Krypton 007, GM, Audi, and BAIC Huawei Enjoy S9, received fixed points. At the same time, the European guide groove project for many best-selling models such as Volkswagen and SAIC was targeted. By the end of 2023, the company was developing 42 new project models, with sufficient orders in hand. The company's revenue is expected to maintain steady growth as the company's new customers break through and the number of active projects continues to expand.
The adverse effects of raw materials gradually dissipated, and profitability reached an inflection point. In 2023, the company's gross margin was under pressure due to factors such as fluctuations in production and sales in the automotive industry and the continued high position of superimposed raw materials. With the continuous mass production of newly developed model projects in the third quarter of 2023, the company's gross margin and net margin improved markedly, and profitability reached an inflection point. Considering the high self-production rate of the company's tooling and molds, and linking the performance pay of frontline employees to the scrap rate in the production process through an assessment system and incentive mechanism, we believe that the company has a prominent advantage in cost control, and gross margin is expected to continue to improve.
Expand advanced production capacity and further strengthen the company's growth capacity. The company is actively expanding advanced production capacity, speeding up the introduction and deployment of first-class international and domestic production equipment according to the customized needs of high-end customers, and built 2.5 billion advanced production capacity within three years; the company's annual output of 1 million sets of NEV frameless sealing strip projects and intelligent logistics center projects have been reported, aiming to obtain nearly 90 acres of land north of the company and start construction in 2024. As the company actively expands advanced production capacity, the company's market share is expected to grow further.
Profit forecasting and investment suggestions: Considering that the company has excellent cost control advantages and is developing new products smoothly, new customers can expect key models to be released. At the same time, the company is actively increasing its production capacity layout, and the market share is expected to increase further. We expect the company's net profit to be 2.37, 3.30, and 394 million yuan respectively in 2024-2026, with corresponding PE valuations of 16.28, 11.68, and 9.80 times, respectively, maintaining the “increase in holdings” rating.
Risk warning: Vehicle sales fall short of expectations, increased price competition among automakers, targeted project implementation falls short of expectations, capacity construction progress falls short of expectations, etc.