Mingxin Automotive Leather(SH:605068) Guotai Junan Securities·2024-04-23 10:02Investment Rating - The report maintains a "Buy" rating with a target price adjusted to 19.44 CNY from the previous 29.00 CNY [22][25][28]. Core Insights - The company is experiencing a customer structure adjustment period, with weak performance reported in 2023. Revenue reached 910 million CNY, a year-on-year increase of 5.9%, while net profit decreased by 45.2% to 60 million CNY. The adjusted EPS for 2024-2025 is now forecasted at 0.72 CNY and 0.96 CNY, respectively, with a new 2026 EPS estimate of 1.27 CNY [11][25]. - The company has returned to a growth trajectory in Q1 2024, with revenue of 220 million CNY, a year-on-year increase of 50.3%, and net profit of 10 million CNY, up 329% [11][27]. - The company is expanding its new material applications and accelerating customer acquisition in the new energy sector, with a full order book and entering a release phase for orders [11][27]. Financial Performance Summary - In 2023, the company reported a revenue of 910 million CNY, with a net profit of 60 million CNY, reflecting a significant decline in profitability due to product structure adjustments. The gross margin was 26.1%, down 6.4 percentage points year-on-year [11][24]. - The Q1 2024 gross margin improved to 27.4%, an increase of 6.4 percentage points year-on-year, while the net margin was 5.8%, up 9.7% year-on-year [11][24]. - The company’s financial forecasts indicate a revenue growth rate of 33.6% for 2024, with a projected net profit of 117 million CNY, representing a 112.1% increase [24][25]. Market Position and Valuation - The company is positioned above the average valuation of comparable companies, with a 2024 PE ratio of 27 times, reflecting its business turning point and ongoing order releases [11][25]. - The stock has a market capitalization of 2.409 billion CNY, with a current price of 14.82 CNY, indicating potential upside based on the adjusted target price [22][30]. Product and Customer Development - The company is focusing on new product launches, with significant revenue growth in new materials such as ultra-fiber leather, which has the potential to replace traditional leather products [11][27]. - The company’s major client, Volkswagen Audi, has faced sales pressure, impacting the overall performance, but new product lines are expected to drive future growth [11][25].