Recommended logic: 1) integrated layout of the camera head, glass-plastic hybrid lens to achieve mass production, subsidiary Chengrui Optics quasi-A-share listing or enhance the valuation level; 2) Global Acoustics leader, vehicle acoustics business has made a fixed-point breakthrough; 3) Touch motor accelerated penetration in the Android market, key customer projects contribute to the growth of structure performance. 4) the company takes the initiative to reduce costs and increase efficiency, capacity utilization is expected to pick up, and net profit will grow at a compound rate of 25% in the next two years.
Optical integrated layout, Chengrui Optical listing or enhance the valuation. The company has constructed the VCM integrated layout system of optical lens module. 1) the company's 5p and above plastic lenses become the main shipments, and 7p lenses are expected to be shipped in 2023. The company has obvious advantages in WLG technology, and the glass-plastic hybrid lenses of 1G5P and 1G6P have been mass-produced and delivered. In 21 years, more than 500 million plastic lenses were shipped. 2) the camera module has developed rapidly, and the shipment volume of 22Q1 in 21 years is about 67 million / 42 million. 3) Voice coil motors are shipped in small quantities, and periscope motors and lift motors are trial-produced. 4) the subsidiary Chengrui Optics intends to list A shares, or improve the valuation level of AAC.
The leading position of global acoustics is stable, waiting for the recovery of downstream demand. As a global acoustics leader, the company is the number one supplier of acoustics for major customers in North America, Android market share continues to increase, and actively expand the tablet, laptop, wearable devices market. The company launched Combo and Opera coaxial solutions. The two-in-one products of acoustics and linear motors have obvious advantages in performance, space and weight, which may effectively enhance the company's share of the acoustics market in the future. With the promotion of Android phone destocking, the future will focus on the progress of downstream market recovery.
The second growth of touch motor is expected, and the key customer project leads to the growth of structural components. The company is the main supplier of touch motors to major customers in North America, and the penetration of the Android market is accelerating, promoting new application scenarios such as cars, game consoles and VR/AR, or pulling the secondary growth curve of the touch motor business. Dongyang Precision acquired by the company has a synergistic effect with the existing structural parts business. Dongyang Phase II plant will improve the production capacity of structural parts, and it is expected that the new projects of major customers will contribute more performance to the precision structural parts business next year.
The vehicle acoustics obtains many fixed points, the emerging application static waiting force. The company's vehicle acoustics solution has been mass-produced and delivered in 2022Q3. At present, the company has obtained a number of designated vehicle acoustics projects, and is expected to contribute more revenue in the future.
The company deepens the layout of the VR/AR field and cooperates with Dispelix to accelerate the landing of the optical waveguide scheme. The company has successfully developed a new 3P VR Pancake optical machine module and will complete the mass production line in 2022.
Profit forecast and rating: the company's 23-24 net profit is expected to grow by 25%. The company is the global leader in acoustics and touch motors, and the share of optical and precision structures will grow or further enhance their competitiveness in the future. The company was given a "buy" rating of 23 times PE in 2023, corresponding to a target price of HK $22.30 for the first time.
Risk tips: the demand for consumer electronic terminals such as smartphones may fall short of expectations, the risk of intensified competition in the industry, the promotion or failure of new projects, the risk of obstruction in the listing process of Chengrui Optics, and the risk of failure in litigation.