Incident Overview

On April 1, the company released its 23-year performance report. It achieved annual revenue of 3,861 billion yuan, an increase of 3.6% over the previous year, and realized net profit of 198 million yuan, an increase of 26.9% over the previous year.

Analytical judgment:

Revenue and profit grew quarterly in '23, and Q4 results reached a record high

Q4 achieved revenue of 1,079 million yuan (YoY +9.5%, QoQ +5.9%), net profit of 91 million yuan (YoY +46.8%, QoQ +28.2%), net profit of 85 million yuan (YoY +51.8%, QoQ +26.9%) in a single quarter, and a net profit margin of 8.43%. The company's quarterly revenue and profit increased quarterly in Q1-Q4 in '23, and profit margins continued to improve. Among them, P&S and SMC's revenue reached record highs, and the MIM business benefited from the 23H2 recovery in the consumer electronics industry and the increase in folding machines from major customers.

The three major business platforms of P&S+SMC+MIM have significant synergy effects

The company's old main business, powder metallurgy structural components (P&S), is stable, and is expanding soft magnetic composites (SMC) and metal injection molding (MIM) businesses through mergers and acquisitions. Currently, all three major businesses are in the first tier of the industry, and the synergy advantages of technology, customer and management can be fully exploited. In March '24, the company completed the acquisition of 10% of Xiaoxiang Electric's shares, and the business layout continues to improve. The next few years will build on this to boost the high-end manufacturing (consumer electronics, automobiles, robotics, medical) and new energy (optical storage, new energy vehicles, charging piles) boom track.

The MIM business benefits from recovery in demand and the increase in folding machines

The subsidiary Shanghai Fuchi is a leading MIM company in China and has MIM and liquid metal businesses. Due to its technical characteristics and scale advantages, MIM technology has significant advantages in the production of high-precision, high-strength, and small-sized precision structural parts, and is suitable for the production of folding screen hinge structural parts. According to questions and answers from the company's investors, the company's MIM business has always supported mainstream 3C terminal customers.

The three-fold folding screen trend is expected to once again stimulate the mobile phone consumer market

Since 23Q3, along with Huawei's release of the Mate X5 and Mate 60, the mobile phone consumer market has recovered. On March 29, according to the China Patent Notice of the State Intellectual Property Office, Huawei announced a patent for a “three-fold folding screen device”. Compared to mobile phones released in the past, the biggest hardware changes are hinge components, flexible screens, glass substrates, etc. The MIM industry for folding screens is expected to benefit from changes in the tri-fold folding screen trend.

Investment advice

Based on the outlook for new trends in folding screens, we adjusted the company's 2023-2025 revenue from 41.89/52.05/5.992 billion yuan to 38.61/52.87/6.177 billion yuan, net profit to mother from 1.89/3.10/367 million yuan to 198/3.5/409 million yuan, EPS from 0.31/0.5/0.6 yuan to 0.32/0.57/0.66 yuan, closing price 15.04 yuan on April 1, 2024, corresponding to PE It was 47/26/23 times, maintaining the company's “gain” rating.

Risk warning

Downstream demand falls short of expectations, upstream raw materials fluctuate, and technological development falls short of expectations.