公司功能性器件占位行业龙头客户，产品积极横向扩张为公司打开成长空间。功能性器件具备定制属性强、产品更新快、规模优势显著和客户粘性强的特点。公司目前主要客户包括富士康、比亚迪、歌尔股份、超声电子、信利光电、快捷达及赛尔美等。在消费电子下行周期内，富士康的北美大客户产品迭代快，市场竞争力强，产品销售额受影响较小。此外，公司也在积极开拓新客户及产品新应用方向。目前产品已应用于智能手机、智能可穿戴设备、汽车电子、动力电池、智能安防及电子雾化器等领域。Company profile
The company is a leading manufacturer of functional devices in China. Its products include functional devices, jigs and automation equipment for electronic products. Downstream can be divided into two major application fields: consumer and automotive electronics.
Investment logic
The company's functional devices occupy leading customers in the industry, and active horizontal product expansion opens up room for the company to grow. Functional devices have the characteristics of strong customization properties, rapid product updates, significant scale advantages, and strong customer stickiness. Currently, the company's main customers include Foxconn, BYD, Goertek Co., Ltd., Ultrasonic Electronics, Xinli Optoelectronics, Express Delivery and Selmer. In the consumer electronics downturn, Foxconn's major North American customer products iterated rapidly, market competitiveness was strong, and product sales were less affected. In addition, the company is also actively exploring new customers and new product application directions. At present, the products have been used in the fields of smart phones, smart wearable devices, automotive electronics, power batteries, smart security and electronic atomizers.
The new production capacity of the company's IPO will soon be put into operation. According to the company's investor relations activity record on November 9, 2022, the company's Chengdu plant already has production capacity and will be put into production after the project certification is completed. The functional devices sector is expected to achieve revenue of 1,099/1382/1,626 billion yuan respectively in 2023-2025, +37.0%/+25.8%/+17.7% compared with the same period last year.
The company's jigs and automation equipment are expected to benefit from Foxconn's production line transfer and automated assembly and inspection equipment shipment. Due to rising production costs in mainland China and Foxconn's global supply chain strategy, Foxconn plans to move some production lines to India, Southeast Asia and other places. We judge that the company is expected to benefit deeply from this round of production capacity migration. The reason is that the company has dual certification from Foxconn and major North American customers. Automation equipment and functional devices are provided, so it is unlikely that Foxconn wants to replace suppliers of automation equipment and jigs in a short period of time. Furthermore, the company's automated assembly and testing equipment is expected to be shipped in 2023. The revenue scale of the fixture and automation equipment sector is expected to reach 598/646/685 million yuan in 2023-2025, +64.4%/+7.9%/+6.1% over the same period last year.
Profit forecasts, valuations, and ratings
It is estimated that in 2023-2025, net profit attributable to the mother will be 406/452/515 million yuan, EPS will be 3.36/3.75/4.27 yuan respectively, and the corresponding PE will be 14.55/13.05/11.46 times, respectively. We gave the company a valuation of 16XPE in 2024, with a target market value of 7.232 billion yuan and a corresponding target price of 60.00 yuan/share. First coverage, giving the company a “buy” rating.
Risk warning
The risk that customer concentration is too high, consumer electronics shipments fall short of expectations, automotive electronics shipments fall short of expectations, and demand for automation equipment and jigs falls short of expectations.