Solid 1Q Results Show Further Recovery in Transmission Business; HEVI Division Gaining Traction
Reported 1Q EPS of $0.11 on revenue of $22.1 million, up from the prior quarter's loss of $0.08 per share on $19.34 million in revenue. The performance topped the results of the past three quarters, showing the continued recovery of the transmission business in China, which had been affected by the severe COVID restrictions and shutdowns. This is particularly encouraging as 1Q is typically the seasonally weakest quarter due to the Chinese New Year holiday and manufacturing restocking. Record gross margins reflect ongoing product mix shift toward higher-value components. Gross margins reached 25%, up from 20% in 4Q22 and 22% 1Q22, as the company executed well and grew its share of higher-value products such as hydraulic transmissions, which carry better margins. Greenland has consistently invested in R&D and shown its ability to evolve to produce more complex and higher-value products, which we expect will continue in coming years. Expect to see further improvements in the second half of 2023 as markets continue to recover and return to normal. Management noted on the call that 2H23 should be very strong, citing both feedback and forecasts from both its clients as well as its internal outlooks. With China's restrictive COVID policies now ended and the supply chain mostly back to normal, the momentum of the OEM ramp-up is accelerating...
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