Changjiang Securities·2024-09-19 14:10Investment Rating - The report maintains a "Buy" rating for the company [6][9]. Core Insights - The company is a leader in heavy-duty truck engines, maintaining a market share of over 60% in natural gas heavy-duty truck engines, and is expanding into high-displacement engines, which are expected to drive a second growth curve for its engine business [2][5]. - The company has a diversified business model, with steady revenue growth from 2014 to 2023, achieving a CAGR of 11.6%, and is expected to maintain a stable growth trajectory with a projected net profit of 118.71 billion, 138.59 billion, and 155.92 billion yuan from 2024 to 2026 [4][6]. - The company is actively pursuing mergers and acquisitions to penetrate downstream sectors, enhancing the profitability of its subsidiaries, which contributes to overall performance stability [2][5]. Summary by Sections Business Overview - The company has a strong foundation in heavy-duty truck engines, with a consistent first-place market share, and is accelerating its layout in transmissions, axles, and complete vehicles, showcasing its full industrial chain capabilities [2][5]. - The company has diversified into various sectors, including heavy trucks, construction machinery, agricultural equipment, industrial power, and new energy batteries, aiming for globalization and high-end development [4][16]. Financial Performance - The company has demonstrated excellent cost control, with sales, management, finance, and R&D expense ratios of 6.27%, 4.42%, 0.26%, and 3.76% respectively in 2023, while maintaining stable profitability with a gross margin of 17.78% and a net margin of 3.24% during the downturn in the heavy-duty truck cycle [4][16]. - The projected net profits for 2024-2026 are 118.71 billion, 138.59 billion, and 155.92 billion yuan, with corresponding PE ratios of 8.84, 7.58, and 6.73 times [6][9]. Growth Drivers - The company is expanding its high-displacement engine offerings, which have high unit prices and excellent profitability, and is expected to significantly increase its market share in this segment [5][6]. - The company is benefiting from the recovery of the heavy-duty truck market, with domestic demand gradually improving and overseas demand continuing to grow, particularly in the context of favorable policies promoting the replacement of older vehicles [25][28]. Strategic Initiatives - The company has implemented a stock incentive plan to align employee interests with long-term growth, with clear performance targets set for revenue and profit margins from 2024 to 2026 [21][22]. - The company has maintained a high dividend payout ratio, consistently above 30% since 2020, with a current payout ratio of 50%, indicating strong shareholder returns and confidence in future performance [4][21].