Key points of investment
Incident: On December 13, 2023, the company issued a draft restricted stock incentive plan for 2023. It plans to grant 6.9992 million restricted shares to no more than 299 incentive recipients, including company executives, middle management, and core technical (business) personnel, at a price of 18.52 yuan/share.
The dual assessment goal highlights development confidence and motivates employees. The company's performance assessment requirements: the first unlocking period (40% unlocking ratio), the 2024 revenue or net profit growth rate is not less than 30% compared to 2023; the second unlocking period (unlocking ratio 30%), the revenue or net profit growth rate in 2025 is not less than 50% compared to 2023; the third unlocking period (unlocking ratio 30%), the 2026 revenue or net profit growth rate is no less than 70% compared to 2023.
Individual performance assessment requirements: The assessment is carried out on an annual basis. The performance assessment result is A (excellent), the personal level unlock rate is 100%, the performance assessment result is B (pass), the personal level unlock rate is 70%, the performance assessment result is C (unqualified), and the personal level unlock rate is 0%.
Mass production at the US factory is expected to drive order performance to be released one after another. The company has been deeply involved in the field of photovoltaic stents for many years. It is committed to the R&D, production and sales of core components of photovoltaic brackets, and is deeply tied to American customers. Customers include well-known domestic and foreign photovoltaic companies such as NexTracker, GCS, FTC Solar, and Trina Solar. In the first three quarters of 2023, the US plant's start-up schedule was lower than expected and dragged down the company's performance. As the US factory enters the mass production stage, related order results are expected to be released one after another.
In the field of automotive connectors, intelligent penetration is expected to drive order placement companies to mass produce high-speed connectors, and have certain advantages in cost control and response speed.
Furthermore, since communication equipment is gradually being widely used in the fields of automobiles, consumer electronics, etc., the company has overlapping customers in various fields, which provides a convenient foundation for market expansion and product application extension. The company formulates a development strategy with communication connectors as the core, consumer electronics connectors as an important component, and other connectors such as automobiles as extensions. In the context of intelligent automotive development, the company is actively working in the field of automotive connectors. Its main customers include major car companies and core suppliers such as Huawei, BYD, Geely, and Changan. The business progressed smoothly in recent years, turning a loss into a profit in 2021, with revenue of 134 million yuan and net profit of 18.73 million yuan. As the penetration of automotive intelligence accelerates and the company deepens its layout in this field, it is expected that related business orders will continue to grow, further contributing to the increase in performance.
AIGC is driving the explosion of data traffic. The company is actively developing 800G optical modules. The AIGC explosion drives the accelerated emission of 800G optical modules. The company's subsidiary Wuhan Yigu Optoelectronics products currently cover 400G and below, and is also actively developing 800G optical modules. The future expansion of the optical module product category will bring some flexibility to the company's performance.
Profit forecasting and valuation
The company's net profit for 2023-25 is estimated to be 1.52, 3.93, and 540 million yuan, corresponding to 39, 15, and 11 times PE, maintaining a “buy” rating.
Risk warning
Market competition intensifies; order release falls short of expectations; risk of international trade conflicts; product development falls short of expectations, etc.