Incident: The company released its 2023 performance forecast. During the reporting period, it achieved net profit of 111-115 million yuan, a year-on-year decrease of 54.13% to 37.45%; deducted non-net profit of 0.90 to 130 million yuan, a year-on-year decrease of 57.88% to 39.17%. Among them, net profit attributable to mother was 0.10 to 50 million yuan in the fourth quarter, and deducted non-net profit of 0.01 to 39 million yuan.
The lower progress of US base construction than expected affects performance. In 2023, the company's US scaffolding base construction progress fell short of expectations, and production capacity was not fully released. As a result, sales volume to US customers declined, and upfront expenses were invested more, which had a certain impact on performance.
The tracking bracket industry has returned to high growth, and the company's overseas business logic is clear. PV brackets have gone through a three-year reshuffle period since 2021. As module prices fell to around 1 yuan/W, global installed demand for terrestrial power plants increased dramatically. The US tracking bracket market space accounts for nearly 50% of the global market. At the same time, leading US companies have strong competitiveness in the country, high industry barriers, and a good competitive pattern. The company is deeply tied to head tracking bracket companies such as the US. As the US base gradually gets on the right track, the company is expected to fully benefit from the growing demand in the overseas tracking bracket market.
The connector business is extensive, and high-speed connector technology is leading. The company has communication connectors as the core, consumer electronics connectors as an important component, and other connectors such as automobiles as extensions. The company is one of the few domestic enterprises with the ability to mass-produce high-speed connectors. 5G SFP and SFP+ series products have been successfully developed and passed various performance tests with key customers.
Investment advice: The demand for the tracking bracket market in 2024 is highly deterministic. The company is deeply tied to major customers such as the US, and is expected to fully benefit from the growth of the industry. We expect the company's net profit from 2023-2025 to be 1.30/3.77/507 million yuan, or -45.79%/190.15%/34.38% year-on-year, covered for the first time and given a “buy” rating.
Risk warning: Risk of overseas production capacity falling short of expectations, worsening industry competition, and fluctuating raw material prices.