Incident: The company announced its semi-annual report on August 25, 2022. 2022H1's revenue was 2.118 billion yuan, up 77.35% year on year; net profit of converted mother was 140 million yuan, up 30.64% year on year; net profit after deducting non-return net profit of 112 million yuan, up 63.38% year on year. 2022Q2 revenue was 1,046 million yuan, up 54.45% year on year, down 2.43% month on month; net profit returned to mother was 94 million yuan, up 10.39% year on year, up 100.00% month on month; net profit after deducting non-return net profit of 77 million yuan, up 22.95% year on year and 120.00% month on month.
Performance was high year-on-year, and consumer electronics performance was impressive: the company achieved revenue of 2.118 billion yuan in the first half of the year, an increase of 77.35% over the previous year. Among them, consumer electronics products performed brilliantly. In the first half of the year, it achieved revenue of 1,699 billion yuan, a year-on-year increase of 120.16%; network communication products achieved revenue of 260 million yuan, a year-on-year increase of 57.77%. The company's revenue scale has grown rapidly. The main reason is that the company has introduced new consumer electronics customers such as Xiaomi and Honor to fill the missing share of the original major Huawei customers, complete customer structure optimization, and follow the new customers to achieve share growth. At the same time, on the basis of the original communication terminal business, the company has vigorously expanded businesses such as smart wearables and automotive electronics. Through the introduction of new products from leading customers in the industry, the company has achieved initial results. In terms of expenses, the company's 2022 H1 sales expenses, management expenses, R&D expenses and financial expenses were respectively 14 million yuan/137 million yuan/59 million yuan/112 million yuan, respectively, 82.12%/44.88%/17.00%/98.92%. Affected by factors such as increased sales scale, increased equity incentive expenses, and increased exchange losses, the company's three-fee level increased significantly year-on-year.
Entering the field of smart wearables & automotive electronics, it is expected to build a second growth curve. In recent years, the company has been actively developing emerging businesses such as smart wearables and automotive electronics. In the smart wearable sector, with the global consumption upgrade from material to service-based and quality-oriented consumption trends, the market for wearable devices such as AR/VR/TWS headsets is growing rapidly. The company's existing customers, mobile phone brand manufacturers such as Xiaomi and Huawei, are all deployed. The company's smart wearable business is expected to follow customer development and achieve rapid growth based on customer resource advantages. In addition, the company is actively laying out the automotive electronics business. In the field of automotive electronics, the company has successfully entered the automotive electronics industry supply chain. Currently, it has obtained the global supply chain qualification of Valeo, a well-known auto parts supplier, and achieved mass production this year . As the trend of vehicle electrification and intelligence continues to advance, the company's customer expansion continues to break through, and the automotive electronics business is also expected to achieve rapid growth.
Fund-raising projects are progressing steadily, and the deployment of overseas business is accelerating. Since its listing, the company has actively increased its production capacity layout, and continued to expand production capacity through the IPO fund-raising project, the Huizhou Phase II production base construction project, and the expansion project Guanghong Technology Phase III Intelligent Production and Construction Project. Its Huizhou Phase II production base has been fully put into operation, and the Phase III project has been gradually put into operation in the second quarter of '21. It is estimated that after full production, it can achieve annual sales revenue of 2.165 billion yuan and net profit of 307 million yuan. Capacity expansion provides favorable guarantees for the company's subsequent business development. Furthermore, the company follows customer development, provides capacity guarantee for customer foundry needs, accelerates overseas business layout, and enters the Indian market through the acquisition of India's Vsun. Currently, the Indian factory has maintained a good development trend. Vietnam and Bangladesh have maintained a good development trend. It is also gradually being implemented. The overseas business layout is expected to further expand the company's market share and enhance its position in the industrial chain.
Covered for the first time, with a “increase in holdings” rating: The company is a leading EMS manufacturer in China, and its business covers a wide range of PCBA and finished product assembly of electronic products such as consumer electronics, network communications, and automotive electronics. In the consumer electronics sector, the company has successfully developed new customers such as Xiaomi and Honor on the basis of the decline in the share of the original major customer, Huawei, etc., with impressive incremental orders; in the automotive electronics sector, it has obtained global supply chain qualifications from Valeo, a well-known auto parts supplier, and has achieved mass production, with strong subsequent momentum; in addition, the company is actively increasing production capacity and overseas business layout, opening up room for growth for the company's global layout.
We estimate the company's net profit for 2022-2024 to be 468 million yuan, 582 million yuan, and 694 million yuan, EPS is 0.60 yuan, 0.75 yuan, and 0.90 yuan respectively, and corresponding PE is 21X, 17X, and 14X respectively.
Risk warning: Downstream demand falls short of expectations, capacity expansion falls short of expectations, new business development falls short of expectations, and industry competition increases risk.
