Introduction to this report:

The company is a leading manufacturer of aluminum alloy precision die castings, focusing on the “communication+automobile” market. The company has achieved deep ties with industry leaders. It will fully benefit from the “5G+ New Energy Vehicle” wave in the future, and performance growth can be expected.

Key points of investment:

The target price was 44.84 yuan, which for the first time covered the “increase in holdings” rating. It is predicted that the company's EPS for 2023-2025 will be 1.07/1.61/2.15 yuan, +0.5%/+50.7%/+33.4% over the same period last year. After comprehensive PE and PB valuations, the company was given a target price of 44.84 yuan, corresponding to 27.9 times PE in 2024, covering the first time, giving the company an “increase in holdings” rating.

Deeply involved in aluminum alloy precision die-casting, “communication+automobile” two-wheel drive. The company has been deeply involved in the aluminum alloy die casting industry for more than 20 years, and has industry-leading manufacturing levels and high-quality customer resources. Since 2020, the company has achieved a significant increase in revenue performance driven by the “5G+ new energy vehicle” wave. In the future, as the company's construction/planned production capacity is released one after another, the company's revenue and performance are expected to achieve even better results.

The 5G revolution has brought about increased demand, tied to rapid growth of leaders. Currently, global communication technology is being upgraded from 4G to 5G, which in turn has spawned demand for 5G base station construction. Compared with 4G base stations, the radiation area of 5G base stations is smaller, so the number of potential constructions is higher. The huge demand for 5G base station construction will drive demand for base station aluminum alloy structural components, and the company will benefit fully from leading technology and high-quality customer resources.

Weight reduction helps increase the amount of aluminum used in bicycles, and integrated die casting opens up new markets. The company adheres to new energy transformation. The share of new energy vehicle revenue in the automobile business has been rising continuously in recent years. On the one hand, demand for lightweight new energy vehicles will expand market space, and on the other hand, the gross margin of new energy vehicle products will be higher than that of traditional vehicle products, and the company's profitability will improve. The company first released the Bureau's integrated die-casting, leading the industry in technical strength. Currently, the company has obtained relevant points. In the future, the vast integrated die-casting market will bring high growth to the company.

Risk warning: declining prosperity in the automobile industry, fluctuations in raw material prices, exchange rate and trade risks.