Auto parts sector

Wind data shows that as of press time on February 24, 93 companies in the A-share auto parts sector have disclosed their 2024 performance forecasts, of which 53 are expected to have better performance last year.

Industry insiders believe that driven by the rapid growth of the new energy vehicle market and the continued efforts of national policies, the auto parts industry has shown strong resilience. Many companies have promoted steady performance improvements through coordinated efforts in domestic and foreign markets, technological innovation and global layout.

Domestic and foreign markets work together

According to the Shenwan secondary industry classification, among the 248 A-share auto parts companies, 93 have disclosed their 2024 annual performance forecasts, of which 53 expect their net profit to increase, increase slightly, turn losses into profits or reduce losses year-on-year last year, accounting for about 57%.

The reporter noticed that many companies stated in their performance forecasts that the increase in orders and the improvement in capacity utilization are the key to the company's improved performance. Taking Shanghai Yanpu Metal Products Co., Ltd. as an example, the company expects to achieve a net profit attributable to shareholders of listed companies of approximately 137 million yuan in 2024, an increase of approximately 50.66% year-on-year. The company said that in 2024, the company will start mass production of more new projects, the market order volume will be sufficient, the company's capacity utilization rate will increase, and the cost will be reduced accordingly; at the same time, in 2024, the company will continue to improve lean production and process, continuously improve production efficiency, and bring cost reduction.

Wu Gaobin, Secretary-General of the New Productivity Committee of the China Association for Promoting Democracy, analyzed to the reporter of Securities Daily that the increase in sales of new energy vehicles in my country has brought more orders and market share to auto parts companies. At the same time, the Chinese government attaches great importance to the new energy vehicle industry and has introduced a series of policy measures, such as car purchase subsidies and exemption from purchase tax, which also provide strong guarantees for the development of the new energy vehicle industry. It is expected that the overall performance of the auto parts industry will maintain stable growth in 2024.

In addition, under the wave of "going overseas", my country's auto parts companies are exploring foreign markets through factory construction, mergers and acquisitions, etc., which is also an important reason for the performance growth of many companies in 2024. For example, Zhejiang Asia Pacific Electromechanical Co., Ltd. mentioned in its performance forecast that in 2024, the company actively explored domestic and foreign markets, continued to increase the research and development of new products, enhanced innovation capabilities, optimized product structure, and strengthened the maintenance and development of high-quality customers at home and abroad. The company's overall operating income level has steadily increased. Zhejiang Meili Technology Co., Ltd. stated in the announcement that the company actively explored domestic and foreign markets, with stable growth in operating income, and the capacity utilization rate of the company and its subsidiaries has increased, the comprehensive gross profit margin of products has rebounded, and profitability has improved.

Industry development is expected to be optimistic

Industry insiders believe that from the perspective of the industry as a whole, the performance of listed auto parts companies in 2024 is expected to be optimistic, and the development of the industry in 2025 is also full of opportunities.

On February 25, Cui Dongshu, secretary-general of the National Passenger Car Market Information Joint Conference, issued a statement saying that the retail volume of passenger cars is expected to reach 23.43 million units in 2025, a year-on-year increase of 2%. Among them, the wholesale volume of new energy passenger cars is expected to reach 15.65 million units, a year-on-year increase of 28%.

Wu Gaobin told reporters that the rapid development of the new energy vehicle market will continue to drive the performance growth of parts companies. With the continuous expansion of the new energy vehicle market, the demand for core components such as batteries, motors, and electronic controls will become more and more vigorous, and related parts companies will usher in more orders and profit margins. On the other hand, with the support of national policies and the transformation and upgrading of the automobile industry, parts companies are expected to make breakthroughs in technological innovation, product upgrades, and other aspects, and further improve their performance.

Zhi Peiyuan, vice chairman of the Listed Company Investment Professional Committee of the China Investment Association, also expressed optimistic expectations for the industry. He said that the global automotive industry is currently in a period of profound change, and the trend of electrification, intelligence and networking is unstoppable, which provides Chinese auto parts companies with an opportunity to "change lanes and overtake". Domestic auto parts companies have increasingly accumulated profound technology in the fields of new energy vehicles and intelligent networked vehicles, and some companies have the strength to compete with international giants. In addition, domestic parts companies continue to strengthen brand building and continuously optimize supply chain management, which has continuously improved their competitiveness in both domestic and foreign markets.