Connector leading suppliers, rapid growth of automotive business, high-quality and rich customer resources. Founded in 2003 and listed in 2016, the company has become a large-scale professional enterprise with connector and shield design, development and production capacity after nearly 20 years of development. The company's products are mainly used in the two major areas of automobiles and mobile phones, of which the automotive business has accounted for about 60% of revenue since 2016, and revenue in 2021 increased by 54.43% year-on-year, driving the overall revenue growth rate to increase 15.62pct. In the field of automotive electronics, the company has realized the supply of domestic and foreign well-known auto parts companies, such as Valeo, Magna, Keshida, BYD, Ningde Times, Huichuan Technology, etc. the products are used in mainstream vehicle manufacturers such as Volkswagen, GM, Mercedes-Benz, Ford, SAIC, BYD, Great Wall and Geely, as well as leading new energy vehicle brands such as Tesla, Inc., XPeng Inc., ideal, NIO Inc., Jinkang, etc. High-quality customer resources provide guarantee for the rapid development of automobile business. The company's revenue scale has continued to expand in recent years, with 2022H1 reaching 405 million yuan, an increase of 24.45% over the same period last year. In the past two years, profitability declined slightly under the influence of the decline in mobile phone business, the pre-investment in fixed assets for production expansion and the increase in the price of raw materials. The company reduced the impact by optimizing product structure and strengthening cost control. 22H1 gross profit margin and net profit rate increased year-on-year. Q2 single-quarter gross profit margin and net profit rate increased 4.27pct and 2.65pct. It is expected that with the strengthening of capacity release scale effect and upstream price decline. Profitability continues to improve, and the growth rate of the company's performance will increase significantly.

Electric and intelligent open the incremental market of automobile connectors, and there is a broad space for localization. Automobile is the main application scenario of connectors, accounting for more than 20%. With the increase of automotive functions and the increase of automotive electronic value, the number of bicycle connectors has increased. New energy vehicles are equipped with 8-1000 connectors with a value of 3000-10000 yuan, which is much higher than that of traditional fuel-fired vehicles. Intelligent driving related ADAS assembly rate increased, connector transmission rate, anti-electromagnetic interference ability and other requirements increased, with Fakra, Mini-Fakra, HSD and vehicle Ethernet connectors as the representative of the vehicle high-speed high-frequency connector bicycle consumption and value increased significantly. According to our estimates, it is estimated that the global market for high-voltage connectors for passenger vehicles will be 37 billion yuan in 2025, and the market for high-speed and high-frequency connectors will be 30.1 billion yuan. From the perspective of the competitive pattern, due to strong technical and customer barriers, the market concentration of automobile connectors is higher than that of other segments, overseas manufacturers have significant first-mover advantages and economies of scale, leading the market for a long time, of which Tyco accounts for 39% of the market. In recent years, with the customized demand of electrification and intelligent innovation and the supply chain reform opportunities brought about by the eastward movement of the automobile industry and the rise of domestic new energy vehicle brands, local connector manufacturers actively expand their customers and accelerate domestic substitution by making use of the competitive advantages of price, quality, cost and supply services that have been accumulated for many years.

The automotive product structure has been continuously improved, and the delivery capacity has been enhanced. The company has the ability to develop new products synchronously with foreign automobile factories and automotive electronic module integrators, advanced mold development technology, forming a mold modular system, has a national certification laboratory, and forms more than 100 independent intellectual property rights. break through technical and customer barriers and establish the first-mover advantage of automotive electronic products. At present, the company has developed thousands of sets of automotive molds, including high-voltage and high-current connectors, high-definition high-speed connectors, high-frequency connector products, which have fully covered terminal new energy vehicles, ADAS intelligent driving assistance, intelligent network connection, 5G communications and other application fields. At the same time, the overall product layout of electronic and electrical architecture connectors such as millimeter wave radar module, lidar module, domain controller system, autopilot system, intelligent cockpit system and electronic control system has been continuously improved, and new products have been put into production one after another. The company completed the fixed growth in July 2022, raising 700 million for new energy vehicle connectors and R & D center projects. it is estimated that after reaching production, the annual production capacity of 5 million high current and voltage connectors for new energy vehicles and 12 million (sets) of auxiliary driving module connectors will be significantly improved, and the gradual appearance of scale effect is expected to further consolidate the company's core competitiveness.

Investment suggestion: Laimu Co., Ltd. is a leading supplier of automotive connectors in China, with nearly 20 years of experience in connector and shield design, development and production. The company established the first-mover advantage in the automotive field earlier, with customers covering the world's mainstream auto parts suppliers. With the automotive electric and intelligent opening up the incremental space of the connector industry and the continuous expansion and structural optimization of its own products and customers, the company's performance is expected to usher in rapid growth. We estimate that the company's net profit from 2022 to 2024 will be 88 million yuan / 161 million yuan / 242 million yuan respectively, and the EPS will be 0.27 yuan / 0.49 yuan / 0.74 yuan respectively. Corresponding to PE53X/30X/20X, the company will be given a "buy" rating for the first time.

Risk hints: rising price risk of major raw materials; lower-than-expected demand risk; technology iteration risk; market competition intensification risk; industry spatial measurement deviation risk; the public information used in the research report may be lagging behind or not updated in a timely manner.