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Company Profile　　IKD Co., Ltd. is a China-based company principally engaged in the research, development, production and sale of automotive aluminum alloy precision die-casting parts. The company"s main products are aluminum automotive parts. The company"s products are mainly used in automotive wiper systems, automotive transmission systems, automotive steering systems, automotive engine systems, automotive brake systems and other systems. The company distributes its products in domestic market and to overseas markets. （Source: Reuters）。　　Event　　IKD Co., Ltd. （“the company”） releases its 2022 annual report.　　The company reported CNY4.265 billion in revenue for 2022, a year-on-year increase of 33.05%.　　The company reported CNY649 million in net profit attributable to shareholders for 2022, a year-on-year growth of 109.29%.　　For the fourth quarter of 2022, the company reported CNY1.239 billion in revenue, up 45.10% YoY and 3.83% QoQ; the company also reported CNY241 million in net profit attributable to shareholders, up 678.22% YoY and 24.18% QoQ.　　Comments　　The company’s 4Q22 revenue rallied YoY and QoQ, and the net profit margin recovered to 19.47%.　　The YoY and QoQ growth in Q4 revenue was likely driven by the larger capacity of its new factory.　　For 4Q22, the company’s gross profit margin was 29.54%, up 6.26pps and down 0.51QoQ. The 4Q22 expense ratio was 10.97%, down 8.62pps YoY and up 3.18pps QoQ. The major YoY drop in expense ratio was mainly due to the decrease in financial expenses as a result of changes in gains and losses from exchange rate.　　The company’s net profit margin in 4Q22 surged to 19.47%, up 15.84pps YoY and 3.19pps QoQ. The company has started the construction of its phase-II plant in Mexico and plant in Malaysia, in a bid to speed up global expansion with North America as the anchor.　　（1） The company’s first phase of production base in Mexico has now been completed, and all equipment relocation will be finished by the first quarter of 2023, so the plant is expected to be put into operation in Q2 this year.　　At the same time, the company will start the construction of the second phase plant in Mexico, and the its business expansion and revenue growth in North　　America are expected to exceed expectations. （2） Based on the 40,000 square meters aluminum alloy raw material production base that the company planned in Malaysia in June 2022, the company also introduced plans for die-casting workshops and supporting processing workshops, which are expected to start construction in April 2023 and be completed in the first half of 2024. The products of the Malaysian production base will also be sold to the North American market, as the company will accelerate its global expansion with North America as the anchor.　　Earnings forecast and investment recommendation　　The company is scaling up its medium and large new energy products, and we are bullish on its new cycle of capacity and category expansion.　　The company focuses on precision die-casting, expands new energy products and customers, and is receiving results from capacity expansion, which will bring high revenue growth. As the capacity utilization is improved, the net profit margin is also expected to rise.　　In addition, the company’s layout for integrated die-casting business is expected to become a new growth point. We maintain our forecast of the company’s net profit attributable to shareholders at CNY897 million and CNY1.127 billion for 2023 and 2024. We also estimate its 2025 net profit attributable to shareholders at CNY1.535 billion.　　We maintain the rating of “Outperform”。　　Potential risks　　Less-than-expected downstream automobile production and sales; slower-than-expected start of production oft he company’s new plants; major fluctuations in raw material prices.【免责声明】本文仅代表第三方观点，不代表和讯网立场。投资者据此操作，风险请自担。

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