1. The company is deeply engaged in the electronics industry, with rapid growth in revenue and profits, and entering the connectors and new energy markets:

The company has been a leader in the field of light guide structures and components, precision key switch structures and components for many years. The company has always expanded the industrial chain around the main industry, and continued to promote applications and product innovation, from thin film switches and backlight modules to MiniLED backlight, FPC, the company continues to carry out in-depth layout of the industry and product upgrading iteration. The company fosters new business growth points, enters the precision connector and new energy markets, and invests in expanding production of FPC modules and CCS production lines.

At present, the company's revenue mainly comes from light guide structures and components and precision key switch structures and components. In 2021, the company's revenue from light guide structures and components and precision key switch structures and components accounted for 73.9% and 11.75% respectively. The proportion of the SMT typing business is 9.44%. The company's revenue and net profit increased rapidly, with revenue CAGR reaching 32% and net profit CAGR reaching 69% in 2011-2021. The company has strong profitability, and the gross profit margin and net profit margin are higher than the industry level.

The company has a good customer base, R & D investment continues to improve, under the technology priority development strategy, the application innovation ability continues to enhance, the new project space is broad.

2. The company's main business is growing rapidly, and the basic market is solid:

The company's revenue of light guide structures and components reached 54.17% in 2013-2021. The light guide structure and components mainly include light guide film, backlight module and other products, the company's main business is notebook keyboard backlight module, the penetration of backlight module in the global notebook keyboard continues to improve, and the company has obvious advantages in the field of backlight module. into the global mainstream notebook manufacturers supply chain system, market share continues to improve. At the same time, based on the backlight module, the company expands the MiniLED backlight project, which is mainly used in automobile interior backlight, keyboard backlight and display screen backlight. MiniLED backlight has the advantages of both OLED and LCD in display performance, and has the characteristics of long life and non-burning screen, the company's backlight module business will maintain stable growth.

The company's revenue and gross profit of precision key switch structures and components are growing rapidly, and revenue in 2021 increased by 68.73% compared with the same period last year. The company's products are mainly used in the field of intelligent terminals, such as Click Pad buttons, intelligent wearable devices, mobile phone main keys and side keys, motorcycle handle keys, all kinds of household appliances control panels and remote controls, game handles.

The company has successfully developed ultra-miniature waterproof light touch switches to achieve import substitution, wearable equipment will become an important market, and the company's precision key switch structure and component business is expected to maintain rapid growth.

3. The company will lay out connectors, expand production of FPC and CCS, and cultivate new profit growth poles:

The company intends to acquire 100% shares of Xin Weixing and invest in expanding production of CCS and FPC modules. Xin Weixing is a state-level high-tech enterprise specializing in the research, development, production and sales of precision connectors and precision hardware. the main products are widely used in consumer electronics (such as mobile phones, smart wearable devices, smart home, etc.) and new energy vehicles, with a good customer base, coordinated and complementary with the company's main business.

At the same time, the company uses part of the super-raised funds to invest in the construction of CCS and FPC modules for power batteries and energy storage battery systems, with a total investment of 565 million yuan. After the completion of the project, the company will increase the annual production capacity of 12 million sets of CCS modules and 39 million pieces of FPC modules. The company already has the technical ability to produce FPC on a large scale. CCS module is the extension of the company's FPC business and the further extension of the company's industrial chain around the main business. At present, the company's revenue mainly comes from the sales of light guide structures and components, precision key switch structures and components. With the expansion of new business, the company has changed from the field of consumer electronics to the field of CCS and FPC modules for new energy power batteries and energy storage battery systems.

CCS module is mainly used in the field of power battery and energy storage battery. The rapid development of new energy vehicle industry and energy storage industry provides great market opportunities for CCS modules.

Compared with the traditional scheme, CCS has obvious advantages and has become the mainstream solution of new energy vehicles. According to our estimates, the market size of new energy vehicle CCS in 2025 is as high as 17.2 billion yuan, and the CAGR is expected to reach 23% in the next three years. With the rapid development of new energy vehicles and energy storage industry, the company has a broad space for CCS/FPC business development.

4. Profit forecast:

We estimate that the company's operating income from 2022 to 2024 will be 8.9416.45 / 2.678 billion yuan, YOY 8.07% 84.05% 62.76%, parent net profit 1.58max 2.67 / 403 million, YOY 6.09% YOY 68.97% / 50.92%, EPS1.04/1.76/2.66 yuan, respectively, giving the company a "recommended" rating.

5. Risk tips: the global economic boom is not as expected, the sales of new energy vehicles are not as expected, the company's mergers and acquisitions and investment expansion are not as expected, and the company's new business progress is not as expected.