Deep ploughing precision parts business for many years, binding large customers steady growth. Fu Liwang was founded in 2006, since its inception has been focused on precision metal parts research and development, manufacturing and sales, the company's parts business downstream including 3C, automobiles, power tools and so on. In 2017, the company's products were certified by Apple Inc, the global consumer electronics leader, and 2020H1 Apple Inc accounted for 70% of the company's income. Benefiting from Apple Inc's key customers, the company's revenue has grown steadily.
The rapid growth of emerging consumer terminals and the upgrading and iteration of traditional consumer terminals have brought market opportunities for metal parts. Although the growth rate of sales of traditional consumer terminals has declined with the increase in the penetration of mobile phones and PC, emerging consumer terminals such as TWS headphones, smartwatches and XR are in the ascendant. Emerging consumer terminals put forward higher requirements in terms of lightness, material strength and protective performance, driving the growth of demand for related metal parts. Traditional consumer terminals are also constantly upgrading and iterating, bringing incremental demand for metal parts.
Epitaxial mergers and acquisitions cut into the photovoltaic field, the layout of photovoltaic screen is expected to break the overseas monopoly. In 2018, the company acquired a 71.50% stake in Qiangxin Technology and laid out the photovoltaic diamond wire bus business. with the rapid growth of downstream photovoltaic installation demand and the gradual release of the company's production capacity, the diamond wire bus business is expected to continue to contribute to revenue increment. In addition, the company relies on photovoltaic diamond wire bus technology layout photovoltaic wire mesh, acoustic wire mesh and other products, is expected to break overseas monopoly and achieve domestic substitution.
The company has grasped a number of core technologies, and formed a technology and process system composed of key core technologies and patents, which is the key to ensure the company's long-term high-quality development. For example, the company has mastered the technology of using spinning process to process consumer electronic parts, compared with stamping process, spinning process has advantages in the cost of moulds and raw materials, which is expected to help the company to gain more market share.
Profit Forecast and Investment suggestion: we expect the net profit of 2022 and 2023 in 2024 to be 1.83, 274, 386 million and 2.23 per share, respectively, corresponding to the closing price PE of 23.27, 15.56, 11.03 on September 20, 2022. Coverage for the first time, giving a "overweight" rating.
Risk hints: downstream demand is less than expected risk; single major customer risk; product technology iteration risk; industry competition intensifies.