Wuxi Zhenhua(SH:605319) Guohai Securities·2024-05-05 08:30Investment Rating - The investment rating for Wuxi Zhenhua is "Buy" (maintained) [1] Core Views - In Q1 2024, Wuxi Zhenhua achieved operating revenue of 490 million yuan, a year-on-year increase of 15.95%, and a net profit attributable to shareholders of 77 million yuan, a year-on-year increase of 103.54% [1][2] - The company's profitability improved significantly, benefiting from lower upstream raw material prices, capacity release, and cost reduction efforts [2] - The company is expected to see rapid growth in its main automotive parts stamping and welding business due to customer expansion and increased demand from downstream clients [2] Financial Performance Summary - Q1 2024 financial highlights include: - Gross margin of 25.53% and net margin of 15.78%, up 0.46 percentage points and 3.81 percentage points respectively from 2023 [2] - Accounts receivable balance decreased compared to the end of 2023, leading to a significant reduction in credit impairment losses [2] - Revenue and profit forecasts for 2024-2026: - Expected operating revenue: 2.931 billion yuan (2024), 3.546 billion yuan (2025), 4.185 billion yuan (2026) with year-on-year growth rates of 27%, 21%, and 18% respectively [2][24] - Expected net profit: 367 million yuan (2024), 448 million yuan (2025), 523 million yuan (2026) with year-on-year growth rates of 32%, 22%, and 17% respectively [2][24] - Earnings per share (EPS) forecast: 1.47 yuan (2024), 1.79 yuan (2025), 2.09 yuan (2026) [2][24] - Price-to-earnings (P/E) ratios are projected to be 14, 12, and 10 times for 2024, 2025, and 2026 respectively [2][24] Market Position and Strategy - The company is positioned as an experienced parts manufacturer, with a stable development linked to SAIC passenger vehicles [2] - The company is actively engaging with new energy vehicle manufacturers and expects the proportion of new energy sales to exceed 50% in 2024, up from 30% in 2023 [11]