Description of the event
On April 24, Weifeng Electronics released the 2023 first-quarter report that the company achieved revenue of 114 million yuan, a year-on-year increase of 12.2% over the reporting period, net profit of 48 million yuan, an increase of 105.06% over the previous year, of which non-recurring profit and loss was 21 million yuan, and the company's net profit after deducting non-return to the mother was 26 million yuan, an increase of 14.17% over the previous year. The company's gross profit margin for the first quarter reached 22.88%, and the company's gross profit margin for the first quarter was 41.86%, a year-on-year decline of 1.72 pct.
Incident comments
The company's revenue grew steadily in the first quarter, its net profit increased dramatically, and net interest rates after deducting non-net interest rates remained high. The company achieved relatively stable growth in the first quarter, mainly due to growth in industry and new energy-related businesses, while the large year-on-year increase on the profit side was mainly due to the increase in disposal revenue and government subsidies from the disposal of its own real estate and land by the company's Kunshan subsidiary. The company's non-current asset disposal profit and loss in the first quarter was 173.354 million yuan, and the government subsidy of 7.8943 million yuan after deducting non-return net profit. Judging from the growth rate on the company's profit side was slightly higher than the growth on the revenue side, the deduction of non-net interest rates reached 22.88%. From the perspective of gross margin, the company's gross margin declined year-on-year. We determine that it was mainly due to changes in the business structure and a decline in gross margin in the new energy connector business. The company's automotive connector business was affected by the pace of downstream customer pick-up in the first quarter, and the situation of major customers pulled goods and orders later.
At the industry level, connectors belong to the Changpo Heavy Snow Industry, and the market space is broad. According to statistics from Bishop & Associates, the global connector market regulation rose from US$52.05 billion to US$78 billion from 2015 to 2021, and the size of the global connector market grew by more than 6 billion US dollars in 2022, a year-on-year growth rate of 7.8%. It is expected that the 2023 market is expected to exceed 90 billion US dollars, which is a typical Changpo heavy snow market. In 2021, the global industrial control connector market accounted for about 13%. In the future, industrially developed countries such as the US and Germany will continue to accelerate the process of industrial automation and intelligence. Furthermore, developing countries are also undertaking a redivision of labor in the global industry, which will boost demand in the industrial connector market. The global industrial equipment market will reach 306.67 billion US dollars in 2023, the domestic industrial automation market will be 249.9 billion yuan in 2022, and the domestic market will continue to expand.
As a domestic industrial control connector leader, the company will fully benefit from the acceleration of domestic replacement processes in the industrial field in the future. Furthermore, the company is actively expanding global industrial control customers, has global competitiveness, and continues to increase its share in the industrial control connector field. It is expected to achieve long-term steady growth in the future. In the automotive and new energy sector, companies have excellent technology accumulation and card advantages, and actively embrace the rapid development opportunities of the industry. In the short term, they will be an important driving force for the company's growth. The company is also actively preparing and laying out high-frequency high-speed connectors for automobiles. We are optimistic about the company's future growth. We expect the company's net profit to be 1.74, 211, and 260 million yuan respectively in 2023-2025, maintaining the company's “buy” rating
Risk warning
1. Fluctuations in the industrial control connector industry:
2. Car sales fell short of expectations.