Wuxi Zhenhua(SH:605319) Tianfeng Securities·2024-09-26 10:00Investment Rating - The report assigns a "Buy" rating for the company, marking it as the first coverage [5]. Core Views - The company has established strong relationships with high-quality clients, enhancing its performance, and the introduction of electroplating has created a new growth curve [1]. - The traditional stamping and welding business remains robust, with deep integration into downstream automotive manufacturers [2]. - The acquisition of Wuxi Kaixiang has opened up a second growth engine through the electroplating business, solidifying the company's market position [3]. - The company is expected to see significant revenue growth from 2024 to 2026, with projected revenues of 28.54 billion, 34.70 billion, and 42.08 billion respectively [4]. Summary by Sections 1. Business Overview - Wuxi Zhenhua, established in September 1989, focuses on developing automotive stamping and welding components and related molds. The company expanded into assembly processing in 2017 and went public in 2021 to increase production capacity [1][10]. - The company has over 3,500 types of stamping parts and has established partnerships with major automotive manufacturers, including SAIC Group, Tesla, and Li Auto, particularly in the growing new energy vehicle market [2][21]. 2. Financial Performance - In 2023, the company achieved revenue of 23.17 billion, a year-on-year increase of 23.19%, and a net profit of 2.77 billion, up 71.23% year-on-year. The gross margin reached 25.07%, reflecting a significant improvement in profitability [3][14]. - The stamping and assembly processing businesses have shown stable revenue growth, with assembly processing revenue reaching 5.91 billion in 2023, a 64.59% increase [14][31]. 3. Electroplating Business - The acquisition of Wuxi Kaixiang has allowed the company to enter the precision electroplating market, contributing 1.5 billion in revenue and 0.9 billion in net profit in 2023 [3][34]. - The electroplating business is expected to grow significantly, with projected revenue increases of 15%, 12%, and 12% from 2024 to 2026 [37]. 4. Investment Recommendations - The report anticipates continued growth in the stamping business due to strong customer demand, with expected revenue growth rates of 35%, 30%, and 28% from 2024 to 2026 [37]. - The assembly processing business is projected to maintain stable revenue growth of 5% annually, while the electroplating business is expected to see robust growth due to strong client relationships [37].