Mingxin Automotive Leather(SH:605068) Guotou Securities·2024-04-23 07:06Investment Rating - The report maintains a "Buy-A" rating for the company with a target price of 17.75 CNY per share over the next six months [7][15]. Core Insights - The company achieved a revenue of 9.06 billion CNY in 2023, representing a year-on-year growth of 5.87%, while the net profit attributable to shareholders was 0.55 billion CNY, down 45.21% year-on-year [12]. - In Q1 2024, the company reported a revenue of 2.24 billion CNY, a significant increase of 50.26% year-on-year, although it decreased by 19.76% quarter-on-quarter [3][12]. - The company is expected to experience high growth driven by four core factors: optimization of customer structure in the leather business, a decline in raw material prices, expansion into new materials, and globalization efforts [6][14][37]. Financial Performance Summary - The comprehensive gross margin for 2023 was 26.06%, a decrease of 6.43 percentage points year-on-year. The leather business gross margin was 29.8%, down 8.57 percentage points, while the synthetic leather gross margin improved to 4.7%, up 3.51 percentage points [2]. - The company’s operating expenses ratio for 2023 was 22.6%, an increase of 2.25 percentage points year-on-year, primarily due to increased financial expenses from convertible bond interest [2]. - The forecasted net profits for 2024, 2025, and 2026 are expected to be 1.2 billion CNY, 1.8 billion CNY, and 2.5 billion CNY, respectively, with corresponding P/E ratios of 20.9, 13.7, and 9.8 [7][28]. Business Development and Strategy - The company is actively expanding its customer base by targeting domestic brands and has successfully supplied to companies like Xiaopeng and Neta [6]. - The company is also diversifying its product offerings by developing new materials such as silicone leather and optimizing production processes to enhance profitability [18][37]. - The establishment of wholly-owned subsidiaries in Mexico and the USA is part of the company's strategy to globalize its operations, with plans for production to commence in 2024 [37].