2023Q4's performance increased significantly month-on-month, and future performance is expected to grow steadily, maintaining that “buy” rated companies achieved revenue of 3,880 billion yuan in 2023, +1.14% year over year; net profit to mother of 1,024 million yuan, +1.72% year over year; deducted non-net profit of 999 million yuan, +2.47% year over year; and gross profit margin of 38.58%, +0.27pcts year over year.

2023Q4 achieved revenue of 1,008 billion yuan in a single quarter, -1.10% YoY, +12.07%; net profit to mother of 310 million yuan, -1.85% YoY, +38.50% month-on-month; net profit of 271 million yuan, -2.08% YoY, +23.63% month-on-month; gross profit margin 38.26%, -0.17pcts YoY and -0.25pcts month-on-month. Considering factors such as short-term industry weakness, we lowered 2024 and 2025, and added 2026 performance expectations. We expect net profit for 2024-2026 to be 12.45/14.73/1,760 billion yuan (previous value was 1,469/1,838 billion yuan), corresponding EPS was 5.53/6.55/7.82 yuan (previous value was 6.53/8.17 yuan), and the current stock price corresponding to PE is 17.6/14.9/12.5 times. The company is a leading manufacturer of thin-film capacitors, along with new energy vehicles, photovoltaics, etc. The industry is developing rapidly, and the company is profoundly benefiting. Performance is expected to grow steadily and maintain a “buy” rating.

The company's cost control effect is good. It actively invests in R&D. The unit price of the product was greatly increased. In 2023, the company reduced costs and fees, increased research and development, and the unit price of the product increased dramatically. Looking at the breakdown, the cost side: in 2023, the company's sales, management and financial expenses rates were 1.36%/3.99%/-0.19%, respectively, -0.03/-0.31/+1.14pcts; R&D side: the company increased R&D investment, and the R&D cost rate in 2023 was 3.64%, +0.17pcts; Product side: The average unit price of the company's film capacitors in 2023 was 1.64 yuan/piece, up 0.41 yuan/piece compared to 2022, +33% year on year.

Actively explore high-end markets such as new energy and maintain steady revenue growth in the next few years. As the country increases investment in new energy (photovoltaics, energy storage, wind power, new energy vehicles), smart grid construction, and electrified railway construction, as well as the upgrading of consumer electronics products and the advancement of industrial control technology, it is expected that in the next few years, the high-end thin-film capacitor market will continue to grow steadily, but competition will also intensify. Under this situation, in 2024, the company will maintain steady revenue growth, strive to control costs and expenses, continue to consolidate its traditional market share, actively explore the global new energy market, rail transit market, and power grid market, ensure the smooth implementation of new products, improve production efficiency, improve product quality, and reduce production costs.

Risk warning: downstream demand falls short of expectations; industry competition exceeds expectations; technology research and development falls short of expectations; customer introduction falls short of expectations.