XUSHENG(SH:603305) EBSCN·2024-05-06 08:02Investment Rating - The report maintains a "Buy" rating for the company [10][11]. Core Views - The company is one of the few in the industry that simultaneously masters three major aluminum alloy forming processes: die casting, forging, and extrusion, which positions it well for integrated production and self-developed alloy materials [2]. - The company has successfully expanded its global customer base, including partnerships with major players like CATL and ZF, leading to a decrease in revenue contribution from large customers from 34.4% in 2022 to 27.9% in 2023 [2]. - The company has extended its advantages in the new energy vehicle sector to energy storage products, achieving mass supply of energy storage product casings in 2023 [2]. Financial Summary - In 2023, the company's revenue increased by 8.5% year-on-year to 4.834 billion yuan, while net profit rose by 1.8% to 714 million yuan [10]. - The company's revenue is projected to grow from 5.770 billion yuan in 2024E to 9.060 billion yuan in 2026E, with a compound annual growth rate (CAGR) of 26.10% [4]. - The net profit is expected to increase from 763 million yuan in 2024E to 1.226 billion yuan in 2026E, reflecting a CAGR of 29.21% [4]. - The company's gross margin improved in Q1 2024, reaching 23.8%, up 3.0 percentage points from the previous quarter [3]. Operational Insights - The company is currently constructing a production base in Mexico, expected to commence operations by the end of 2024 or early 2025, which is anticipated to enhance its operational capacity and profitability [3][10]. - The report indicates that the company's operating margin is expected to improve as the new factory ramps up production and costs are gradually absorbed [3]. Valuation Metrics - The target price for the company's stock is set at 16.38 yuan, corresponding to a price-to-earnings (P/E) ratio of 20x for 2024E [11]. - The report projects a decrease in the company's P/E ratio from 18 in 2023 to 10 in 2026, indicating a potential undervaluation in the long term [4][11].