Events:

The company recently announced that the net profit of 23H1 is expected to be 0.9-100 million yuan, an increase of 21.67%-35.19%.

Comments:

The "Trinity" base occupies its own place, and the advantage of reducing cost and increasing efficiency is obvious. 23H1's net profit increased year on year, mainly because the company made full use of the "Dongguan-Vietnam-Jiangxi" trinity production base layout, the company actively promoted flexible, intelligent production strategy, the introduction of ERP and other information systems to improve production management efficiency, large-scale production at the same time to achieve cost reduction and efficiency, the overall gross profit margin for the better.

The gradual release of new products and the continued appreciation of the US dollar also played a positive role in the company's performance.

Deep ploughing the field of electroacoustics, the product line continues to expand. The company is a leading manufacturer of electroacoustic products in China. The company mainly produces headphones and speaker products. In 2022, headphone products accounted for 77.04% of the main revenue, and speaker products accounted for 19.26%. The company seizes the development opportunity of wearable products to launch bone conduction headphones and glasses, AR glasses, smartwatches and other products. At present, the company has maintained close cooperation with the world's top electro-acoustic brands, intelligent terminals and Internet manufacturers, with customers including Harman, Skullcandy, BABA, iFLYTEK, Anke, Glory and other domestic and foreign well-known manufacturers.

Increased penetration of smart wearable devices, bone conduction, AR, smartwatch new products landing is expected to produce significant performance contribution. Smart wear products accounted for 3.06% of the company's main revenue in 2022, up from 1.24% in 21 years. With the landing and volume of bone conduction, AR and smartwatch products this year, the proportion of related business is expected to further increase. 1) Bone conduction: the company has two kinds of products: bone conduction headphones and bone conduction glasses. The barrier of bone conduction headphone industry is relatively high, and the participating company Suoyou Electronics has a patent for the core component of the headphone oscillator, which has obvious technical advantages. The bone conduction headphone industry is still in the 0-1 stage and has a broad space for growth. 2) AR: Riowell, the shareholding company, is the leader of industrial-grade AR glasses. The company cooperates with it to develop and contract industrial-grade AR glasses, which are used in Honeywell, Siemens, BMW, Petrochina Company Limited and other companies. The company participates in the leading enterprise of AR optical waveguide in 2022, and cooperates with each other in the production of AR glasses, which is conducive to the win-win situation of both sides in the AR glasses market.

Profit forecast and investment advice: we expect the company's homing net profit from 2023 to 2025 to be 2.4 million yuan, respectively, and the corresponding PE is three times higher than that in 27-21-17. It is optimistic that a number of new products of the company will further expand their potential, covering them for the first time and giving them a "buy" rating.

Risk tips: exchange rate fluctuations; smart wear growth is not as expected