The company is a supplier of precision die-casting parts for the automotive and communications industries. The company was founded in 2001. Currently, the automobile business accounts for about 40%, including engine die-castings, three-electric system die-castings for new energy vehicles, etc. Among them, the new energy vehicle business is expected to become the core growth in the future; the communication business accounts for about 60%, mainly structural components such as 4G and 5G communication base station bodies and shield covers. The company has various types of die-casting equipment from 280T to 8800T. Customers cover leading companies in the automotive and communication fields, such as leading domestic NEV companies, North American NEV companies, and leading domestic communication equipment manufacturers, Ericsson, etc.

The electric weight reduction dividend plus the company's integrated die-casting competitive advantage is expected to double the growth of its automotive business. It is estimated that the company's automobile business revenue in 2022-25 was 1.47 billion, 2.26 billion, 2.84 billion yuan and 3.86 billion yuan respectively. The share of revenue increased from 42% of 1H22 to 62% in 2025.

1) New energy vehicles drive the expansion of the large aluminum die-casting market, bringing industry dividends. Currently, the average amount of cast aluminum parts used for bicycles is about 110-130 kg. Among them, the three-electric housing will replace engine castings, and the increase in aluminum castings unique to new energy vehicles is about 30-50kg/vehicle, corresponding to about 1500-2500 yuan/vehicle. Furthermore, lightweight and cost-driven integrated die-casting development is expected to increase the domestic integrated die-casting market space from the current 1.6 billion yuan to over 17 billion yuan in 2025, CAGR 122%, and about 150 billion yuan in 2030. The company's new energy vehicle products are mainly three-electric casings. Integrated die-casting development is leading the way, and it is expected that they will fully benefit from industry dividends in the future.

2) Leading customers and first-mover advantages lay the foundation for the company's growth. ① The company actively grasps growth opportunities for leading customers.

The core competitive factor in the field of aluminum die-casting parts lies in customer resources. The company's current first and third largest automotive customers are leading domestic and North American new energy vehicle companies, respectively. It is expected that they will continue to benefit from increased sales and potential ASP increases in the future. ② The first-mover advantage of medium parts brings a cost performance advantage to the product. Since the company operates communication products, the unit price of its volumetric quality is higher than that of automobile parts (200+ yuan vs. 40-60 yuan), which has accumulated R&D and production experience for medium and large parts for the company earlier, which helps improve the yield of medium-sized automobile die-castings and form a cost performance advantage more quickly.

③ Integrated die-casting also has a clear first-mover advantage. The trend in the integrated die-casting industry is clear, but the number of die-casting plants that have actually received trial production experience, orders, and even mass production downstream is extremely limited. The company's 8800T rear floor and battery packs have already gone offline. The first-mover advantage will support the ability to take orders for subsequent new projects. The company's integrated die-casting revenue is expected to be 0.7 billion, 160 million, and 501 million yuan respectively in 2024-25, +1.3 times and +2.3 times the same as in 2024-25.

Global 5G base station structural components continue to grow, and technical advantages+leading customers protect the company's steady growth. The company's telecommunications business revenue for 2022-25 is expected to be 1.65 billion, 1.72 billion, 1.96 billion yuan, and 2.23 billion yuan respectively, maintaining steady growth. The share of revenue will drop from 57% of 1H22 to 36% in 2025.

1) Overseas 5G will continue to drive moderate growth in the industry. 5G is developing rapidly in China and North America, with a penetration rate of about 35%, but Western Europe, the third largest market, is only 11%, and other regions are below 5%. According to the Ministry of Industry and Information Technology, it is estimated that about 600,000 new 5G base stations will be built domestically in 2023, a year-on-year decline. The main future growth may come from overseas. We expect the increase in overseas 5G base stations to exceed 3 million in the next 3 years. With demand in the Chinese market declining, the global 5G base station market is still expected to achieve a 5-10% growth rate.

2) The company's cooling casting technology is pioneering, and leading customers have been steadily increasing over a long period of time: ① The company's cooling technology has a first-mover advantage. It has self-developed high thermal conductivity materials and high-thin heatsink die-casting technology, which can balance the efficiency and weight reduction required for 5G base station cooling. ② Leading enterprise customer security will grow in the future. The company's communication business revenue mainly comes from the top two leading 5G base station equipment companies in the world. On this basis, the company is also capable of further expanding other leading 5G base station equipment companies at home and abroad.

Profit forecast: We expect the company's net profit to the mother in 2023-2025 to be 290 million, 39 billion, and 5.3 billion yuan respectively, +28%, +37%, +34%, and CAGR 33%. The company's highly profitable communications business is expected to maintain steady growth. The development progress of integrated die-casting is in the first tier of the industry. Comparable integrated communications and automotive companies are valued. At the same time, considering that the auto parts sector is currently in a phased downturn in the economy, with reference to the changes in valuation in the previous 2 years, it is expected that the integrated die-casting industry chain with high future growth expectations will first achieve valuation repair. Using 2023 EPS as the benchmark, we gave the company 30 times PE valuation, corresponding to a reasonable listing price of 40.8 yuan.

Risk warning: Macroeconomics and domestic consumption fell short of expectations, raw material price increases exceeded expectations, overseas communication demand grew less than expected, and the volume of integrated die-casting business fell short of expectations.