Brief comment on performance

On August 25, 2023, the company disclosed its semi-annual report that the revenue in the first half of the year was 515 million yuan, + 13.95% compared with the same period last year, and the net profit returned to the mother was 112 million yuan,-9.53% compared with the same period last year.

Among them, Q2 realized revenue of 252 million yuan, + 1.11% compared with the same period last year, and realized net profit of 39 million yuan,-37.28% compared with the same period last year.

Business analysis

The company opened up new business and the cost soared. The company's sales expenses are + 104.58% year-on-year; management expenses are + 54.38%; and R & D expenses are + 41.25% year-on-year. With the active expansion of the company's product category, power battery aerogel and consumer electronics automatic assembly and testing equipment have become the main driving force of the company's performance growth this year. The company is actively expanding new business areas, leading to rapid cost growth is an important factor in short-term performance pressure. Looking forward to the whole year, it is optimistic that the smooth release of the company's new products will lead to the rapid growth of the annual performance.

The company's functional devices occupy the leading customers in the industry, and the products actively expand horizontally to open up the growth space for the company. Functional devices have the characteristics of strong customization, fast product update, significant scale advantage and strong customer stickiness. At present, the company's main customers include Foxconn, BYD, Gore shares, Ultrasonic Electronics, Xinli Optoelectronics, Jetta and Salmel and so on. The company's automation equipment is expected to benefit from Foxconn's production line transfer and terminal product upgrades. Under the influence of rising production costs in the mainland and Foxconn's global supply chain strategy, Foxconn plans to transfer some of its production lines to India, Southeast Asia and other places. We judge that the company is expected to benefit deeply from this round of capacity transfer, the company has Foxconn and North American major customers double certification automation equipment and functional devices, downstream customers are the same, with the advantage of customer recognition. In addition, every year, the end customer new products are highly customized for automatic assembly and testing equipment, and the automatic assembly and testing equipment will be updated or replaced according to the new products. The shipment of consumer electronics assembly and testing equipment provides the company with a second growth curve.

Earnings forecast, valuation and rating

It is predicted that the net profit of the company from 2023 to 2025 is 4.06,4.52 and 515 million yuan respectively, which is + 32.67%, 11.46% and 13.88% respectively compared with the same period last year. The current price of the company corresponds to the PE valuation of 13.26,11.89,10.44 times, maintaining the buy rating.

Risk hint

The risk of high customer concentration, lower-than-expected shipments of consumer electronics, lower-than-expected shipments of automotive electronics, and lower-than-expected demand for automation equipment and fixtures.