Finance Association, April 24 (Reporter Huang Lu) “The company's development strategy is very clear. By developing the assembly business of complete machines, further integrating the industrial chain, improving product value and profit margins through new technologies, new processes, new materials, and R&D and innovation in new fields, it is possible to achieve higher production efficiency yields. Furthermore, promoting automation to achieve better cost reduction and efficiency is our main goal for all departments this year.” The relevant person in charge of Lansi Technology (300433.SZ) said today.

He also said that the overall value of the assembly business is quite large. With the increase in yield and efficiency, Xiangtan Lansi turned a loss into a profit last year, contributing positively to the company's revenue and profit growth. Some new customers and new projects will be introduced one after another this year. Judging from the order trend, the second quarter will be relatively stable, and the peak demand season for major customers will mainly be concentrated in the third and fourth quarters.

This afternoon, Lansi Technology held a performance exchange meeting for the 2023 Report and the 2024 Quarterly Report. A number of brokerage researchers participated and exchanged views on various aspects such as industry trends and company operations.

Financial reports show that in the first quarter of 2024, the company achieved operating income of 15.498 billion yuan, a year-on-year increase of 57.52%, a record high for the same period of the year; net profit to mother was 309 million yuan, an increase of 379.02% over the previous year; and the performance showed a positive trend from quarter to quarter.

Regarding the fact that both Q1 revenue and net profit maintained a high year-on-year growth rate this year, Liu Shuguang, the company's financial director, said that revenue growth was mainly due to an increase in the company's smartphone and computer business; the year-on-year increase in net profit to mother was mainly due to improved operating efficiency and better cost control.

“On the cost side, the overall increase in expenses in the first quarter was relatively small. Sales expenses and management expenses increased slightly as revenue grew, investment in technology research and development continued to remain stable, and financial expenses were drastically reduced.” Liu Shuguang further stated that specifically, sales expenses increased 5.67% year on year in the first quarter, management expenses increased 14.59% year on year, and R&D expenses remained the same as the same period last year. Financial expenses decreased by 229 million yuan over the same period last year. The main reason is that the exchange rate of RMB against the US dollar has changed quite a bit compared to the same period last year.

Some participating investors asked about the impact of changes on the demand side of the consumer electronics industry on the company's operations? In response, Jiang Nan, director of the company, said that consumer electronics have a relatively large terminal base, and fluctuations up and down would be a normal range. Major customers were also older and younger in different years, but judging from the company's ongoing orders, because the company and major customers have always maintained close cooperation for a long time in the development and mass production of new products, the company's share in protective glass has remained stable for a long time, and now new products and projects have been introduced in metal frames and smart wearables. Overall, the company has sufficient projects and orders. This year's orders have all been confirmed, and production is currently being stepped up. Due to the stable cooperation between the company and major customers, and the market share is also expanding, the impact of industry fluctuations on the company has not been seen.

The progress of Lansi's assembly business is also one of the concerns of investors. The company's complete machine assembly business is mainly in the Xiangtan Park. Jiangnan said, “The overall gross margin of the assembly business is relatively low. The company is considering using complete machine assembly to promote vertical integration in the industrial chain. In particular, it can continuously import upstream components, that is, parts we produce ourselves, and by further improving efficiency and yield, it is conducive to improving our core competitiveness and is in line with the development trend of the industry.”

“The Xiangtan Park in 2022 is still in a climbing phase. In 2023, through continuous optimization of efficiency, yield, and quality, it was highly recognized and trusted by domestic and foreign customers, and various high-end mobile phones and components were assembled in batches, and the annual business target of turning losses into profits was achieved as scheduled. Now the company is also actively cooperating with major domestic customers in everything from parts to complete machine assembly. The current growth rate of the assembly business is also very fast. It is expected that the assembly business will continue to develop new customers and categories this year to maintain the growth of this business.”

It is worth mentioning that as a leading enterprise in the field of consumer electronics components and assembly, Lansi Technology is seizing the opportunities of the rise of AI. The new Meizu 21 Pro AI machine released in the first quarter of this year was assembled by Lansi Technology. According to industry insiders, Lansi Technology provides hardware support for Microsoft's AI PC and may provide it with parts such as metal parts, keyboards, and glass protective screens.

In the annual report disclosed a few days ago, Lansi Technology also revealed that it will continue to deeply cultivate the consumer electronics market, strengthen new fields and new business development, embrace the industrial trend of upgrading smart terminal products to AI, vigorously explore new customers and products in the field of smart terminals and computing power such as AI phones, AIPC, servers, GPUs, etc., improve the company's current production capacity utilization rate, and further enrich the product structure.

In addition to the consumer electronics sector, Lansi Technology has been in the automotive field for a long time. New energy vehicles and smart cockpits are its key business segments. Some investors are concerned about the specific category composition of this business and the share of domestic and foreign revenue. The relevant person in charge of the company said that the current major customer in North America is Lansi's first major customer. The company has established cooperative relationships with more than 30 domestic and foreign new energy vehicle brands and traditional luxury vehicle brands. The customer structure continues to be optimized. New products such as central control modules, instrument panels, smart B-columns and C-columns have been certified by more customers and have entered the mass production stage one after another. The new power battery precision structural parts business quickly completed R&D, certification, and mass production during the year, and achieved a breakthrough in market share, which will further share the growth opportunities of the power battery market.

Regarding future development, Lansi Technology mentioned that in the future, it will continue to expand the product categories, further enrich the company's product line, and also mainly promote new products such as large double screens and large automotive glass such as triple screens, side windows, windshields, and canopies. The value of the products is expected to continue to increase for downstream customers.