Incidents:
On April 27, the company released its 2022 annual report and 2023 quarterly report. It achieved revenue of 931 million yuan in 2022, an increase of 35.75% over the previous year; it achieved net profit of 68.3509 million yuan, an increase of 43.22% over the previous year. Q1 2023 achieved revenue of 233 million yuan, an increase of 14.37% over the previous year; Guimu's net profit was 2012.25 million yuan, up 33.86% year on year.
Comment:
Revenue grew steadily in '22, and Q1 performance exceeded expectations in '23. In 2022, against the backdrop of the overall downturn in the industry, the company achieved significant growth in performance by continuously enriching its product layout. The automobile business was the main driving force for growth. The total revenue of automotive products was 667 million yuan, an increase of 46.66% over the previous year; among them, automotive precision connectors and their components achieved revenue of 640 million yuan, an increase of 48.53% over the previous year. Affected by the epidemic in Q4 '22, the company's performance fell short of expectations; Q1 in '23, as the company's operations returned to normal, revenue increased 14.37% over Q1 in '22.
Equity incentives demonstrate the company's confidence in future development. The company announced the draft of the 2023 company equity incentive plan on April 29. The current incentive plan is expected to grant 3.2832 million shares to 118 incentive recipients. Incentives include company directors, senior management, core managers, and core technical (business) personnel. This equity incentive plan shows the importance the company attaches to establishing a sound long-term incentive and restraint mechanism, enhancing employee stability, and mobilizing employees' enthusiasm and creativity, and further highlights the company's confidence in achieving a 50% compound growth rate in operating income.
Seize the opportunities for the intelligent development of automobile electrification and have a first-mover advantage in automotive electronics products. Under the trend of intelligent electrification of automobiles, the usage and performance requirements of automobile connector bicycles have increased markedly. The company has been deeply involved in automobile racing for many years, and has now invested a lot of money in mold and product development in the automotive field. As a capital-intensive industry, the automotive electronic components industry already has a great first-mover advantage. At present, the company has developed a variety of high-voltage high-current connectors, high-definition high-speed connectors, and high-frequency connector products. The products have fully covered application fields such as terminal new energy vehicles, ADAS intelligent assisted driving, intelligent connectivity, and 5G communication.
The product line is gradually being enriched, starting a new curve of performance growth. In 2023, the company plans to establish new projects such as multi-core integrated plug-in quick-lock communication module connectors for photovoltaic inverters, 800G optical module case products, hydrogen energy battery pack test benches, etc., to expand the company's product line to the fields of photovoltaics, optical communications, energy storage, hydrogen energy batteries, etc., to enhance the company's profitability.
First coverage, giving a “buy” rating. We are optimistic about the company's layout in the automotive connector field and the expansion of the product line to enhance profitability. It is estimated that the company will achieve revenue of 1,376/21.20/3,343 billion yuan in 2023-2025, respectively, and net profit of the mother is 1.12/176/280 million yuan respectively, and the corresponding PE is 36.98/23.47/14.77 times, respectively.
Risk warning: The release progress of the new plant falls short of expectations, and the progress of automotive product development falls short of expectations