Introduction to this report:
The company's performance for the third quarter of 2023 is under short-term pressure. The Q4 rail transit business is expected to benefit from industry recovery. The company's technological breakthrough in charging guns will help accelerate the growth of the new energy business, and the company's long-term development momentum is sufficient.
Key points of investment:
Maintain an increase in holdings rating. We maintain the company's 2023-2025 EPS forecast at 0.42/0.58/0.76 yuan respectively. Considering the increase in the overall valuation level of the connector sector, we raised the company's valuation level to 45x PE in 2024 and raised the target price to 26.1 (+8.7) yuan to maintain the increase in holdings rating.
The company's third-quarter results are under short-term pressure, and Q4 results are expected to recover. According to the company's report for the third quarter of its 2023 results, the company achieved revenue of 1,011 billion yuan in the first three quarters, -3.40% year-on-year, and realized net profit of 90 million yuan, -23.52% year-on-year. The main reason was that the company's basic trading business was affected by the epidemic and the low level of prosperity. 23 In the second half of the year, many rail transit-related companies received large orders. As the epidemic faded, the signs of the overall recovery of the industry faded. It is hoped that it will spread to the parts side to help the company gradually release forward orders. The company's rail traffic revenue is expected to increase, and overall performance is expected to recover.
The company achieved a breakthrough in charging gun technology, helping the new energy business to grow at an accelerated pace. The company's automotive products cover a wide range of products and have entered the supply chain system of domestic first-tier brands and joint venture brands such as BYD, Huawei, Geely, Celis, Great Wall, Chery, Changan, SAIC, FAW, Guangzhou, BAIC, Honda, etc. At the same time, the company has mastered high-power liquid-cooled charging gun technology, which can achieve a maximum current of 600A and a rated voltage of 1000V, and has now formed batch supply. It will continue to benefit from the volume of new energy vehicles and the construction of supporting facilities such as charging stations.
Catalysts: New energy vehicles accelerate penetration; charging pile construction exceeds expectations.
Risk warning: The recovery of the rail transit industry falls short of expectations; market competition is intensifying.