Micro-transmission benchmark company actively lays out automobiles+XR. The company was founded in 2001 and successfully listed in 2020. It has been deeply involved in the micro transmission industry for more than 20 years. Its main products are micro transmission systems, precision parts and precision molds. With rich experience in manufacturing non-standard products, the downstream application fields include MR, automotive electronics, robots, etc. With 2023Q1-Q3, the company achieved revenue of 8.1 million yuan, an increase of 4% over the previous year; net profit of 130 million yuan to mother, an increase of 25% over the previous year. We believe that, driven by demand for automotive electronics and MR, the company's performance will enter a new period of growth.
The XR market has broad prospects, and the company's IPD adjustment module release is imminent. We believe that Apple's upcoming Vision Pro is a revolutionary product that has been around for many years and is expected to bring new growth impetus to the market. Wellsenn XR expects VR and AR shipments to exceed 42 million units and 10 million units respectively in the next 5 years. According to our estimates, the market space for microtransmission systems in XR products may exceed 3.3 billion yuan in 2026.
The company actively lays out IPD adjustment modules in the XR field. Currently, the main customers are Pico and Apple. The first-mover advantage and precision manufacturing capabilities are building competitive barriers, and it is expected that the customer and product matrix will continue to expand in the future.
Automotive electronics have been steadily expanding, and the volume and price of micro drives have risen sharply. The trend of vehicle electrification and intelligence is gradually evolving. According to data from the Car Cloud Network, by the end of 2023, the penetration rate of new energy vehicles in China was close to 38%, of which the intelligent penetration rate had already exceeded 60%. The company mainly provides precision parts and micro transmission systems in the automotive sector. Its applications cover various fields such as cockpit, chassis, body, and supporting facilities (such as charging pile locks). The value of bicycles exceeds 1,500 yuan. The main customers include traditional car companies such as Bosch, BYD, Guangzhou Automobile, and Changan from Germany, as well as new car companies such as Wei Xiaoli. We are optimistic that the company will continue to expand new models and expand the development of new customers in existing customer models in the future, driving the gradual growth of the automotive sector's performance.
Profit forecast and investment suggestions: We expect the company to achieve operating income of 13.3/17.1/390 billion yuan in 2023/2024/2025, with a year-on-year increase of 15.4%/28.3%/39.9%, and a net profit of 1.85/2.55/ 350 million yuan, an increase of 22.8%/37.8%/37.2% competition. The current stock price corresponding to 2023/2024/2025 PE is 51/37/27X respectively, considering that the company has strong technical accumulation in the field of microtransmission systems and Barriers, the automobile business consolidated the basic market, MR opened up space for medium- to long-term growth, covered for the first time, and gave it a “Highly Recommended” rating.
Risk warning: raw material prices have risen; MR equipment sales have fallen short of expectations; industry competition has intensified.