What happened: the company released a report for the third quarter of 2023 that the company's revenue in the first three quarters of 2023 was 1.055 billion yuan, down 7.85% from the same period last year; the net profit was-28 million yuan, down 220.44% from the same period last year; and the non-net profit was-17 million yuan, down 185.04% from the same period last year. On a quarterly basis, Q3 achieved revenue of 424 million yuan in 2023, an increase of 22.79% over the same period last year, an increase of 13.00% over the same period last year; net profit from the home was-184 million yuan, an increase of 80.31% over the same period last year, and an increase of 55.06% over the same period last year; deducting 665900 yuan from non-net profit, it significantly reversed losses over the same period last year and decreased by 90.99%.

The performance of Q3 has improved significantly, and the prosperity of the notebook industry continues to pick up: in 2023, Q3, the company's operating income grew at a high speed compared with the same period last year, deducting non-net profits from the same period last year, and the operating performance improved significantly. Q3 in 2023, the company's gross profit margin is 13.17%, year-on-year + 10.75pcts, the main reason is that the company's profitability is repaired with the improvement of orders; the net profit rate is-0.55%, year-on-year + 2.23pcts. In terms of expenses, in the first three quarters of 2023, the company's sales, management, R & D and financial expense rates were 1.26%, 3.79%, 3.62%, 1.18%, respectively, with year-on-year changes of + 0.02/+0.81/-1.43/+2.45pcts. Among them, the financial expense rate and absolute value have increased compared with the same period last year, mainly due to the exchange loss and the increase in interest on convertible bonds. According to Canalys, global shipments of Q3 laptops fell 6 per cent year-on-year to 52.1 million units in 2023, a decline that continued to narrow, with shipments growing for two consecutive quarters on a month-on-month basis, indicating a further recovery in the Q3 notebook industry and a gradual recovery in demand. The company's performance is expected to pick up at the bottom of the electricity industry and enter the repair fast lane.

The proportion of metal structural parts is increasing, and profitability is expected to continue to improve: the company has been ploughing into the field of notebook computer structure modules for many years, and has become one of the leading companies in the field of notebook computer structural parts in China. and with Lianbao, Compal, Wizhuang, Huaqin and other world-famous notebook computer contract manufacturers to establish a long-term and stable cooperative relationship. The products are finally used in mainstream and emerging notebook brands such as Lenovo, Dell, XIAOMI, Acer, Hewlett-Packard and so on. In the first half of this year, the company optimized the shipping structure of notebook computer structures, and the proportion of metal structures shipped increased. The company expects that the proportion of metal structures will increase significantly for the whole year, and the revenue of metal structures will account for about half of the revenue in the second half of this year. In terms of production capacity, the company's IPO investment project "the second phase of the new PC precision structure construction project" raised 198 million yuan, and 1.8 million sets of notebook computer precision structures were added every year after it was put into production. The capacity utilization rate of the company's metal structures is close to 60% from July to August in 2023, and it is expected to pick up gradually with the growth of global laptop shipments in the future.

The company's metal structure business started relatively late, the gross profit margin began to become positive last year, and is steadily increasing. As the unit price of metal structural parts is higher than that of plastic parts, with the improvement of the yield of metal parts in the future, the company's profitability is expected to continue to improve.

Deep layout of the photovoltaic industry, the second growth curve: H2 in 2022, in order to cope with the downward impact of consumer electronics, the company cut into the field of photovoltaic modules from notebook computer structures. the use of their own independent mold development capabilities, high-precision plastic and metal processing capabilities and existing capacity to produce photovoltaic module supporting products, quickly enter the photovoltaic market. In terms of production capacity, the company currently has a 500MW photovoltaic module production line, the current Feimi new energy production line is fully operational, and the other two new lines of 800MW high-efficiency photovoltaic module equipment will be installed one after another in the near future and reach production by the end of the year. The company expects that the production capacity of 2.4GW photovoltaic modules will be completed by the end of this year, and is expected to contribute to 20GW module production capacity within three years; and it is expected that the TOPCON battery chip production line will be officially completed next year. In March, 2023, the first piece of the company's photovoltaic module production line; from July to August, the company's distributed photovoltaic power station project orders increased rapidly. The company has set up project companies in Anhui, Kunshan, Chongqing, Hunan and Guangxi, and the relevant distributed photovoltaic power station projects are progressing steadily; in addition, the company set up Hubei Feimi Energy Storage subsidiary in August this year, and plans to carry out energy storage EMS and BMS business. In the second quarter of 2023, the company's actual sales of photovoltaic modules were about 14 million yuan, of which about 12 million were power station projects. According to the National Energy Administration, the newly installed domestic photovoltaic capacity was 78.42GW in 2023, an increase of 154 per cent year on year. From January to July 2023, China's photovoltaic exports reached US $32 billion, an increase of about 6 per cent over the same period last year. In the future, with the continuous growth of the domestic photovoltaic industry, the company's photovoltaic business is expected to usher in major development opportunities.

Maintain "buy" rating: the company is mainly engaged in the R & D, production and sales of consumer electronics structure modules, related precision moulds and new solar cells and high-tech photovoltaic modules; the company's main products are notebook computer structure modules and related precision moulds, photovoltaic batteries and photovoltaic modules. In 2023, H1, the company's high-efficiency solar modules were rolled out for the first time, and the production capacity gradually climbed; the 500MW new energy production line of Feimi, a subsidiary, was in full operation, and two other 800MW high-efficiency photovoltaic module production lines are expected to reach production by the end of the year. Since the beginning of this year, with the demise of terminal inventory and the recovery of consumer electronics demand, the prosperity of the notebook industry continues to pick up, and the company's main business performance is expected to be repaired gradually; at the same time, considering the high growth of the photovoltaic industry, we believe that with the company's new line of production, photovoltaic module capacity gradually released, photovoltaic business is expected to become the company's second revenue growth pole, contributing to incremental performance. It is estimated that the net profit of the company from 2023 to 2025 is 13 million yuan, 49 million yuan and 72 million yuan, and the EPS is 0.10,0.37 and 0.55 yuan respectively, and the corresponding PE is 176x, 47x and 32x respectively.

Risk tips: photovoltaic business development is not as expected, notebook demand recovery is not as expected, market competition risk, raw material price fluctuations.