Q1 net profit increased year-on-year. We are optimistic that the annual automobile revenue growth/new product release will go smoothly. 1Q24 achieved revenue of 1,259 billion yuan (YoY: 22.9%, QoQ: -7.7%) and net profit of 170 million yuan (YoY: 111.3%, QoQ: 4.3%). By business, automotive electronics and energy storage revenue increased by 93.42% year over year to 190 million yuan, showing a good trend in automobile orders.
Furthermore, gross margin was +4.8pp to 36.95% year over year, and profitability increased significantly. Looking ahead to the whole year, we are optimistic: 1) the company's cars have been released and new customers are gradually being introduced; 2) LTCC and new integrated inductor products contribute revenue. EPS is predicted to be 1.11/1.36/1.66 yuan for 24/25/26. Considering the growth of the automotive business into a second curve and the gradual expansion of new products, 30 x 24 year PE (comparable company average value 19.6x) will be given, and a target price of 33.3 yuan will be given to maintain the purchase rating.
1Q24: Automotive electronics and energy storage increased rapidly. In terms of business segments with good cost control during the period, signal processing/power management/automotive electronics and energy storage/ceramics, PCB and other businesses were 27.87%/-0.07%/93.42%/26.82%, respectively. The growth rate of automotive electronics and energy storage revenue was impressive.
The company's Q1 gross margin/net margin increased significantly by +4.8pp/+5.8pp to 36.95%/15.65% year-on-year, with significant profitability growth due to: 1) smooth business development in precision electronic components and new application fields, increasing market orders driving increased capacity utilization; 2) high-end product release drives product structure improvement, which is conducive to improving profitability; 3) the company's labor efficiency has improved, and cost reduction and efficiency measures have been very effective. The company's expense ratio for the 1Q24 period was +0.1pp to 17.98%. Among them, the sales/management/R&D/finance expenses ratio was 0.01/0.21/-0.21/0.05pp to 2.0%/5.5%/8.5%/1.9%, respectively, and the cost control for the period was good.
2024: Optimistic about the release of new products such as LTCC/integrated inductors and the growth of automotive electronics revenue since the beginning of the year. Looking ahead to 2024, we are optimistic: 1) High-end products such as LTCC and integrated inductors are expected to accelerate in 2024. As demand for localized replacement market applications of high-end electronic components continues to increase, the requirements for signal management products of high-end models continue to increase, and sales space for LTCC series products may be further opened up. After many years of continuous investment in R&D, the expansion of production capacity and customer introduction are expected to drive revenue growth; 2) The volume of automotive electronics orders and the introduction of new products will drive an increase in the value of bicycles. The company has been deeply involved in automotive customers for a long time, and has obtained material numbers and is expected to start releasing revenue. At the same time, it is optimistic that the company will continue to break through domestic and foreign customers, and various transformer products, power inductors, etc. are expected to be released.
A target price of $33.3 was given, and the buy rating was maintained
We are optimistic about the company's new product launch, but considering the relatively stable downstream demand for traditional consumption, the revenue growth rate for non-mobile phones and vehicles was slightly lowered, and net profit forecast of 8.96/11.0/1,339 million yuan for 24/25/26. Considering that the company has a leading edge as a leading inductor in the world, it was given 30 times the expected PE for 24 years, and a target price of 33.3 yuan to maintain the purchase rating.
Risk warning: The progress of domestic replacement of inductive products is lower than expected, and the recovery in downstream demand is lower than expected.