Baolong Automotive(SH:603197) Guotai Junan Securities·2024-05-10 03:02Investment Rating - The report maintains a "Buy" rating for Baolong Technology (603197) with a target price adjusted to 60.00 yuan, down from the previous 80.40 yuan [1]. Core Views - The company's performance is under pressure due to expense provisions, but its core business operations are still on an upward trend. The air suspension business has significant growth potential, and with improvements in new business growth and expense management, future performance is expected to recover [1][2]. Financial Summary - In Q1 2023, the company reported revenue of 5.9 billion yuan, a year-on-year increase of 23.4%. The net profit attributable to shareholders was 0.7 billion yuan, up 251.9% year-on-year. However, the net profit excluding non-recurring items was 0.7 billion yuan, down 7.8% year-on-year [1][2]. - The company's EPS for 2023 is projected to be 1.79 yuan, with estimates of 2.40 yuan for 2024 and 3.23 yuan for 2025 [1][2]. Business Growth - The air suspension and sensor businesses are entering a harvest period, with new business orders being robust. The penetration rate of air suspension is expected to continue increasing, and the company is positioned as a leader in domestic alternatives, offering products with quality and cost advantages [1][2][3]. Expense Management - The report highlights that the significant improvement in gross margin and the increase in expense ratios are primarily due to the provision for equity incentive expenses and increased R&D investment [1][2]. Market Position - Baolong Technology is recognized for its strong growth potential in the automotive parts industry, particularly in air suspension systems and sensors, which are expected to drive future revenue growth [1][2]. Valuation Metrics - The report provides a comparison of valuation metrics, indicating that Baolong Technology is valued above its peers, with a projected PE of 24.57 for 2023 and 18.27 for 2024 [1][2]. Conclusion - Overall, the report suggests that despite short-term pressures, Baolong Technology's long-term growth prospects remain strong, supported by its innovative product offerings and market leadership in air suspension systems [1][2].