Event: The company released its 2023 semi-annual report on August 25, 2023. In the first half of 2023, the company achieved total operating income of 243 million yuan, an increase of 9.54% over the previous year; realized net profit attributable to shareholders of the parent company of 75 million yuan, an increase of 49.77% over the previous year; and realized net profit attributable to shareholders not attributable to the parent company of 54 million yuan, an increase of 9.89% over the previous year. In the second quarter of 2023, we achieved total operating income of 128 million yuan, an increase of 7.28% over the previous year and an increase of 12.12% over the previous year; net profit attributable to shareholders of the parent company was 27 million yuan, an increase of 1.49% over the previous year, and a decrease of 43.33% over the previous year.
Comment: The company has formed a development pattern with industrial control connectors as the main body, and automotive and new energy connectors as the two wings. In the first half of 2023, the company's net profit to parent was 75 million yuan, a sharp increase over the previous year. As the size of the downstream market continues to expand, the company is expected to continue to benefit as a leading manufacturer of industrial control connectors in China.
Industrial control connectors: The market scale continues to expand, and the development of industrial robots is laid out ahead of schedule. In 2022, China's connector market will be around US$26.5 billion, making it the world's largest connector sales market. With the implementation of policies such as Made in China 2025 and the Intelligent Manufacturing Development Plan, the scale of China's industrial automation market will continue to expand further. As a leading domestic manufacturer, the company is actively expanding new application scenarios. In addition to applications in fields such as traditional industrial automation equipment, the company also lays out industrial robot research and development ahead of schedule. In 2022, China's industrial robot market reached 60.9 billion yuan, accounting for 45% of the global market, making it the largest market. As a core part of the transformation and upgrading of the manufacturing industry, industrial robots have become a future development trend. The company has now mass-produced industrial robot control connectors such as Wafer series connectors and WD series wire-to-board connectors. At the same time, the company also continues to promote communication and cooperation with customers for high-precision, high-frequency signal transmission connectors required for automated robots, and has already mass-produced products of some specifications. The company's business is expected to continue to grow in an expanding market size.
The “two wings” of automobile+new energy connectors work together to empower the company's rapid development. (1) Automotive connectors are currently the product with the highest gross margin in the company's three business segments, and are also the core business support for the company's performance growth in recent years. The company uses three-electric system connectors as the main product in the automotive connector sector, and continues to focus on medium and low voltage signal segmentation. 2023H1, the company's automotive connectors achieved revenue of 42 million yuan, an increase of 31.8% over the previous year. (2) New energy connectors are the company's key business development and an important strategic development direction. 2023H1, the company's new energy connectors achieved revenue of 40 million yuan, an increase of 23.9% over the previous year. The company grasps the efficient integration of “endogenous+extension” resources, expands the connectors required for household and commercial energy storage and charging applications, provides solutions for photovoltaic energy storage systems, forms comprehensive coverage in the three fields of optical storage and charging, strengthens the new energy connector business layout, and empowers the company's business to develop rapidly.
Investment in R&D continues to be high, and intellectual property rights for technological innovation achievements continue to be accumulated. 2023H1, the company's total R&D investment is 33 million yuan, an increase of 23.67% over the previous year. Through years of continuous R&D investment, the company has established a complete R&D system and mastered many core technologies for connector products. The technical group standards for the three product lines of 2.00SIC high-performance serial connectors, 1.27mm spacing microcomputer system connectors, and oxhorn series lockable connectors developed by the company led by the company have been reviewed by the expert group. As of June 30, 2023, the company has obtained 154 domestic patents, covering industrial control, automobiles, new energy connectors and other fields.
Investment suggestions: The company's net net profit for 23-25 is estimated to be 180 million yuan, 271 million yuan, and 380 million yuan respectively, maintaining the “buy” rating.
Risk warning: Risk of fluctuations in the international macroeconomic and political situation; risk of increased industry competition; technological innovation falling short of expectations; capacity expansion falling short of expectations.