Incident: The company released its 2023 annual report, achieving revenue of 6.210 billion yuan, +3.16% year over year; net profit to mother of 750 million yuan, +35.11% year over year; net profit after deducting non-return to mother of 692 million yuan, +37.22% year over year.
Connectors' revenue has grown steadily, and profitability has increased significantly. By product, relay business revenue during the reporting period was 326 million yuan, -9.21%, gross profit margin of 46.37%, year-on-year +4.56pct; connector and interconnection integrated product revenue of 4.433 billion yuan, +14.28%, gross profit margin 38.49%, year-on-year +6.06pct; motor and control components revenue of 1,258 billion yuan, -16.21%, gross profit margin 35.26%, year-on-year +5.81 pct; optical communication device revenue was 135 million yuan, +8.51% year-on-year, gross profit margin 23.51% Ratio +0.66pct The company's overall gross profit margin was 37.99%, +4.99pct; the net profit margin was 10.82%, +3.16pct year over year. Mainly measures such as design optimization, process cost reduction, procurement cost reduction, and energy consumption control helped the profitability of various products continue to improve.
Focusing on increasing R&D in new industries, cash flow management is beginning to show results. In 2023, the company's management expenses were 554 million yuan, +11.06% over the same period last year, representing an increase in the company's change management expenses and amortization of equity incentive expenses; R&D expenses of 699 million yuan, or +11.81% compared with the same period last year. The company focused on advantages and expertise to actively lay out emerging industries and increase investment in key scientific research projects and product development. In terms of cash flow, the company's net operating cash flow was 1,642 billion yuan, an increase of 819.18% over the same period last year. The company strengthened accounts receivable management, increased the share of cash in payment recovery, and continuously optimized the supply chain material procurement and settlement model, and improved capital management.
The opening of a new track ushered in a breakthrough, and optimized the layout of production capacity construction. During the reporting period, the company focused on emerging industries in the country. The products were applied on a large scale in various fields. The new products developed, such as optical modules, microwave components, aerospace motors, and deep-water sealed connectors, achieved market breakthroughs and achieved batch orders. In addition, the fund-raising project Jiangsu Aolei's “production plant with an annual output of 1.53 million new infrastructure optical modules” was completed and ready for use, and the “industrialization project with an annual output of 397.62 million connectors for new infrastructure and other fields” is progressing in an orderly manner.
Investment advice: The company's net profit for 24/25/26 is estimated to be 9.55/ 11.66/ 1,418 billion yuan YoY +27.3%/+22.0%/+21.7%. Maintain an “Overweight” rating.
Risk warning: Technological innovation falls short of expectations, and capacity construction falls short of expectations.