Events: The company released its three-quarter report for '23. In the first three quarters, it achieved revenue of 3,535 billion yuan (-10.10%), net profit of 100 million yuan (-5.6.30%), net profit of 91 million yuan (year-on-year), net profit of 91 million yuan (-52.89%); net income of 1,311 million yuan (-14.93%), net profit of 34 million yuan (-31.92% year-on-year), net profit of 32 million yuan (-26.64% yoy) in the first three quarters.
Comment: US factories dragged down revenue performance in the first three quarters and are expected to gradually improve month-on-month. The company achieved revenue of 3,535 billion yuan in the first three quarters, a slight decline. In terms of photovoltaic stents, the production capacity of US factories has not yet been fully released, but rigid labor wages and rent expenses dragged down revenue performance in the first three quarters; with the normal operation of factories, US factories are expected to gradually contribute incremental performance. In terms of automobiles, the company expanded its management team in the early stages, increased expenses, etc., further put pressure on the company's overall profit.
In the long run, demand from American customers is booming, and US factories are expected to gradually begin normal operation. After the US factory is built, the company is deeply bound to American customers, directly benefiting from the boom in US photovoltaic demand; the company's US sales model will be similar to the incoming material processing model, and the upfront capital turnover pressure is expected to be greatly reduced. At the same time, the company has gradually released leading orders for new European tracking brackets, which are expected to contribute further to revenue. At present, the US factory has begun mass production. With the gradual normal operation of the factory, it is expected that it will further contribute to incremental performance.
With high-quality automotive connectors, the business has entered a period of order placement and harvest. The company invigorates the automotive high-frequency high-speed field, has a high entry threshold and strong profitability, and is one of Huawei's important partners in the field of high-speed connectors. At the same time, it has expanded BYD, Geely, etc., and has gradually entered the first tier of suppliers. Due to the volume of orders, the company's automotive connector business has turned a loss into a profit in 2021. Currently, products such as BMS connectors and ECU connectors are the main source of revenue. In the future, connectors such as high-frequency Ethernet, sensors, and housings (lidar, millimeter wave radar) are expected to further contribute to increased performance.
Profit forecast: We have adjusted our profit forecast. It is estimated that net profit for 2023-2025 will be 1.51, 3.75 and 461 million yuan, corresponding to PE of November 9, about 44.9, 18.1, and 14.7 times, maintaining the “increased holdings” rating.
Risk warning: Competition in the industry has intensified, orders from major customers have fallen short of expectations, policy adjustments are at risk, and raw material prices have risen sharply.