Brief comment on performance

The company disclosed its three-quarter report on October 25, 2023, with revenue of 927 million yuan in the first three quarters, + 5.03% year-on-year, and net profit of 209 million yuan, 16.82% compared with the same period last year.

Among them, Q3 realized revenue of 412 million yuan,-4.33% compared with the same period last year; realized net profit of 97 million yuan,-23.88% year-on-year; profit improved month-on-month, still under pressure from the same period last year, and the performance inflection point has begun to emerge.

Business analysis

Actively develop new products, the cost continues to increase. The company's sales expenses are + 66.36% year-on-year; management expenses are + 45.73% year-on-year; and R & D expenses are + 35.91% year-on-year. The company continues to spend various expenses to ensure the smooth development of new products. The company is actively expanding new business areas, leading to rapid cost growth is an important factor in short-term performance pressure. At present, power battery aerogel and consumer electronics automatic assembly and testing equipment will become the main driving force for the company's performance against the trend. Looking to the future, we are optimistic that the smooth expansion of the company's other new consumer electronics products will lead to long-term and stable growth.

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. The functional devices of electronic products 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 main applications downstream are the consumer field represented by mobile phones, smart wearable products and smart home, and the new energy / automobile field represented by power battery, energy storage battery and intelligent cockpit, as well as medical and health fields. At present, the company is based on the field of consumer electronics, some new product proofing is progressing smoothly, or it is expected to become a new performance growth point of the company.

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 company's net profit from 2023 to 2025 will be 3.33,4.07 and 477 million yuan respectively, which is + 8.99%, 22.08% and 17.15% respectively compared with the same period last year. The current price of the company corresponds to the PE valuation of 14.59,11.95,10.20 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.