Wuxi Zhenhua(605319) Huaxin Securities·2024-11-04 08:30Investment Rating - The investment rating for the company is "Buy" and is maintained [6]. Core Views - The company is a leading player in the stamping industry, continuously expanding its business matrix and optimizing its customer structure. It has established partnerships with major clients such as Xiaomi, Li Auto, Tesla, and SAIC [1][4]. - The company has a diversified business model with four main segments: automotive stamping parts, assembly processing, selective precision electroplating, and mold business. The stamping parts segment is the largest and has a stable revenue base [1][16]. - The company is capitalizing on the electrification trend, with significant growth opportunities from its partnerships with Tesla, Xiaomi, and Li Auto [4][5]. Summary by Sections Business Overview - The company has over 30 years of experience in the automotive parts industry, evolving from a school-run enterprise to a prominent automotive supplier. It became a key supplier for SAIC in 2005 and entered Tesla's supply chain in 2021 [12][16]. - The company’s main business segments include: 1. Stamping parts: Over 3,500 types of products covering body parts, chassis parts, powertrain components, and electronic parts [16]. 2. Assembly processing: Focused on producing body parts for SAIC's brands [19]. 3. Electroplating: Provides high-precision electroplating services for critical components in fuel injection systems [21]. 4. Mold business: Supports the production of stamping parts [21]. Financial Performance - The company achieved a total revenue of 2.317 billion yuan in 2023, with a year-on-year growth of 32.7%. The net profit attributable to shareholders was 277 million yuan, reflecting a significant increase of 242.6% [8][28]. - Profit forecasts for 2024-2026 are 353 million yuan, 451 million yuan, and 532 million yuan, respectively, with year-on-year growth rates of 27.2%, 27.8%, and 18.1% [6][28]. Market Position and Growth Drivers - The company has established stable supply relationships with major clients, including the three units of SAIC, which produce over 3 million vehicles annually. The company is positioned to benefit from the global expansion of its clients [2][57]. - The company is leveraging the growth of electric vehicles, with Tesla's Shanghai Gigafactory achieving a production volume of 949,700 units in 2023, a year-on-year increase of 30.7% [4]. - The company’s selective precision electroplating business, which was consolidated in 2023, is expected to contribute significantly to profit growth due to its high margins [28]. Strategic Initiatives - The company is implementing a stock incentive plan to align the interests of management and key personnel with those of shareholders, enhancing commitment to long-term growth [32][33]. - The company is focusing on expanding its production capacity to support its core clients, with plans to increase output for electric vehicle components [5][28].