Incident: The company released its 2023 annual report, achieving total operating revenue of 231.905 billion yuan, yoy +8.35%, and realized net profit to mother of 10.953 billion yuan, yoy +19.53%.
The company released its 2024 quarterly report. 24Q1 achieved revenue of 52.4 billion yuan, yoy +5%, and net profit to mother of 2.47 billion yuan, yoy +22.5%. The company released a semi-annual performance forecast for 2024. It is estimated that 24H1 will achieve net profit of 5.23 to 5.44 billion yuan, yoy +20%-25%.
Comment: The 23-year results are in line with the previous forecast, the 24Q1 results and the 24-year semi-annual performance forecast are in line with expectations. The dividends have increased significantly, and we continue to lay out core tracks such as consumer electronics/communications/automobiles. In 2023, the company achieved revenue of 231.905 billion yuan, yoy +8.35%, net profit to mother of 10.953 billion yuan, yoy +19.53%, in line with the previous forecast. By product, computers/automobiles/communications/consumer electronics/others achieved revenue of 75/92.5/145.4/1972/3.4 billion, yoy -33.6%/+13.3%/+10%/-16%, gross margin of 20.8%/15.9%/10.6%/18.83%, respectively. The gross margin of the communications business increased 4.7 pct, which is a significant increase. The gross margin of the computer business increased by 0.47 pct, a slight increase, and the gross margin of consumer electronics/automobiles/others declined slightly, respectively 0.87pct/0.2pct/0.3pct, comprehensive gross margin of 11.6%, yoy-0.6pct. Looking at subsidiary companies, Likai achieved revenue of 79.1 billion yuan, yoy +7%, and net profit of 2 billion yuan, which is basically the same as the previous year; the joint venture company Lizhen contributed to a significant increase in performance. In 2023, the company obtained 2,044 billion yuan in investment income in joint ventures and joint ventures, yoy +157%. At the same time, Lizhen's merger and acquisition of Kunshan Shishuo helped further expand scale and improve production efficiency. The company plans to distribute a discovery dividend of 21.53 billion, a share payout ratio of 19.66%, and a share payment rate of 10.1% in '22. The dividend strength has increased significantly. The capital expenditure for 2023 is 11.4 billion yuan, yoy -16%. R&D continues to lay out the consumer electronics/communication/automobile core circuit. Consumer electronics R&D projects cover AR glasses/VR headsets/wearable devices, communication R&D projects cover optical modules/224G high-speed interconnection/liquid cooling, etc., and automotive R&D projects cover wire/domain control/charging gun liquid cooling systems, etc.
Earnings grew steadily in the first half of '24. The company released its 2024 quarterly report. In 24Q1, it achieved revenue of 52.4 billion yuan, yoy +5%, net profit to mother of 2.47 billion yuan, yoy +22.5%, and realized net profit deducted from non-mother of 2.18 billion yuan, yoy +23.23%. The company released a semi-annual performance forecast for 2024. 24H1 is expected to achieve net profit of 5.23 to 5.44 billion yuan, yoy +20% -25%, corresponding to 24Q2's estimated net profit of 27.56-2,974 billion yuan, yoy +18%-27%. 24H1 is expected to achieve net profit of 4.7.9-5.08 billion yuan, yoy +15.3%-22.2%, corresponding to 24Q2, which is expected to achieve net profit of 26.06 billion to 2.894 billion yuan, yoy +9%-21%.
As a next-generation spatial computing platform, Vision Pro is building a new PC ecosystem. As the exclusive supplier of Vision Pro machine manufacturing, Lixun is expected to follow the rapid growth of the Vision Pro industry: As the exclusive supplier of Vision Pro machine assembly, the key card position is a next-generation consumer electronics platform. In the future, it is expected to continue to iterate and innovate products while exploring component flexibility, and further enhance the value of stand-alone machines.
The communications and data center sector continues to cultivate products such as electrical connectivity, optical connectivity, air cooling/liquid cooling, power management, radio frequency, etc., with outstanding technical advantages and market competitiveness in the field of high-speed connectivity. In the field of high-speed data center connectivity, the company collaborated with leading chip manufacturers to proactively develop next-generation high-speed connection standards such as 800G and 1.6T for mainstream data centers and cloud service providers. Some segmented products such as external high-speed copper cables, cables and connector components, backplane connectors and backplane cables, HSIO, SSIO, etc. have won customer recognition with leading technology, cost advantages and excellent product performance. Based on this, the company uses this as an entry point to comprehensively promote products such as optical connections, heat dissipation, and power modules to further develop in-depth cooperation with leading customers.
The multi-dimensional product layout of the automotive business targets the trillion-level market, and the port of departure strategy has successfully accelerated the growth of the automotive Tier 1 business. Diversified product layout in the automotive sector: further expand products such as connectors, new energy, smart cockpits, and intelligent connectivity based on wiring; multi-dimensional product lines fully benefit from vehicle electrification, intelligence, and networked transformation; cooperative automakers provide access to the sea for auto parts to accelerate product R&D, introduction and mass production processes: ① Chery: The group holds 20% of Chery Holdings's shares, and the listed company and Chery New Energy set up a joint venture with Chery New Energy; ② GAC: Establishing Shengli Automotive Technology with GAC Group and GAC Components; Group business collaboration: B external acquisition CS has a deep accumulation of automotive electronics , master high-quality customer resources (BMW, Volkswagen, GM, Ford, etc.), and actively expand the boundaries of capabilities in the field of smart cockpit & intelligent driving.
Investment advice: Maintain the profit forecast for 24/25, and expect to achieve net profit of 150/210/25.3 billion yuan in 24/25/26, with PE 30 times for 24, corresponding to a target price of 63 yuan/share, and maintain a “buy” rating.
Risk warning: sales of terminal products fall short of expectations, consumer electronics price cuts affect revenue volume and profitability, new product development falls short of expectations