3Q23 revenue increased 10% year over year and 23% month over month. In the first three quarters, the company achieved revenue of 700 million yuan (YoY +4.83%) and net profit of 50 million yuan (YoY -53.54%). Corresponding to the single quarter, 3Q23 achieved revenue of 299 million yuan (YoY +10.08%, QoQ +22.54%) and net profit of 0.17 billion yuan (YoY -41.30%, QoQ +52.94%). The third quarter entered the traditional peak season for consumer electronics, and the company's revenue increased month-on-month. Furthermore, against the backdrop of a year-on-year decline in sales of some products from downstream customers, the company still achieved year-on-year growth. This is mainly due to the smooth expansion of the company's new product lines, and materials such as Bluetooth trackers and type-c charging interfaces are currently being shipped in batches. There is still pressure on the company's profit. The main factors include: 1) additional equity payment fees since the second quarter; 2) increased depreciation due to the commencement of production of the R&D center project and the King Kong Wire expansion project; 3) the company increased investment in R&D, and R&D expenses increased year-on-year.
The company's metal parts can be used in MR, laptop and other products, and are expected to benefit from the release of new products by major customers.
In October 2023, Apple released the M3 series of chips. Using TSMC's N3B production line, the CPU performance is 15% higher than M2, and the efficiency core is 30% faster than M2. At the same performance, only half the power consumption of M1 is required.
In addition to Macbook Pro and iMac equipped with the M3 series this year, Apple is also expected to launch a series of new products equipped with M3 chips next year. The company's precision components can be applied to notebook charging ports, ports, etc. In addition, the high-profile Vision Pro will also go on sale in the first quarter of next year, and some of the precision metal structural parts produced by the company can also be used in MR and other products.
The revenue of the 1H23 photovoltaic diamond wire bus was 52 million yuan, an increase of 90.06% over the previous year. According to data from the China Photovoltaic Industry Association, the new installed capacity of global photovoltaics will reach 350GW, 430GW, and 540GW respectively from 2023 to 2025, and demand in the downstream photovoltaic silicon wafer industry will continue to grow. At the same time, the company increased investment in R&D to promote the thinning process. In May '23, 31 μm busbars began to be shipped in small batches. In 27 μm sample testing, the diamond wire busbar thinning process took the lead.
The company has obtained a Lamborghini fixed-point project, and the parts business in various fields continues to expand. 1H23's automotive precision metal parts revenue is 81 million yuan (YoY +10.24%). In addition to continuing to maintain deep cooperation with automotive sunroof customers, the company is also cooperating with a leading NEV customer, and the share of related business revenue is gradually increasing. In the future, the company will continue to focus on expanding parts business in fields such as structural components, rear wing motion structural parts, and air conditioning machined parts. According to the company's announcement, it has now obtained a Lamborghini designated project.
Investment advice: We expect the company's revenue to increase 6.4%, 84.0%, and 16.5% year-on-year to 9.86, 18.14, and 2.115 billion yuan in fiscal year 23-25, and net profit of -30.5%, 110.9%, and 12.1% year on year to 1.13, 2.38, and 266 million yuan, maintaining the “buy” rating.
Risk warning: the release of production capacity falls short of expectations; the introduction of material numbers falls short of expectations; downstream demand falls short of expectations.