Incident: Electric Link Technology released its 2023 annual report and 2024Q1 quarterly report, achieving revenue of 3.129 billion yuan and 1,040 million yuan, up 5.37% and 68.77% year-on-year, and achieving net profit of 356 million yuan and 162 million yuan.
Comment: We continue to be optimistic that the company will benefit from the increased penetration rate of autonomous driving. As a core component company for smart driving, the company is expected to benefit significantly. In terms of mobile phones, we judge that the company's main business, the consumer electronics business, is expected to benefit from the total growth of Android and the increase in ordinary BTB.
The consumer electronics boom picked up, and BTB connectors brought in new volume. Global smartphone shipments increased 7.8% year over year to 289 million units in the first quarter of 2024, the third consecutive quarter of growth. From a structural point of view, Android phone sales are the main driving force for growth. The company's customers, mainly Android phones, are expected to benefit significantly. Furthermore, the company's BTB field is expected to benefit from the implementation of domestic 5G millimeter wave spectrum resources. Based on the substantial development expectations of 5G millimeter waves in the 2024 and future markets, the company is expected to achieve revenue growth in LCP cables and RF BTB-related products, expand product production capacity in 2024, and increase production capacity reserves for ordinary BTB products.
Lay out the international market, and enter overseas markets for consumer electronics and automobiles. The company vigorously expanded overseas customers in 2023, further expanded and increased the company's revenue and scale in the consumer electronics non-mobile phone terminal industry, and achieved progress from a high starting point; in the automotive sector, the company also achieved continuous progress among leading overseas tier 1 companies. With the smooth introduction of some overseas customers, the expansion and introduction of other major overseas customers is also expected to continue to break through. Overseas business is showing a new situation. The above is of great strategic significance for the company to expand its overall revenue and increase its share in the international market
Looking ahead to the second quarter and 2024H2, I am optimistic that the company's consumer electronics business will continue to benefit from the recovery in the overall boom in the Android phone industry. At the same time, the company's general BTB business and other businesses are expected to continue to expand, becoming a new engine for the company's consumer electronics business growth. In addition, there is an upgrade trend in mobile communication, 5.5 g/mm wave, which is expected to bring about an upgrade in the company's product specifications and an increase in value; on the automotive side, the company's high-speed connectors are gradually being introduced to downstream automobile manufacturers. Benefiting from the rapid increase in recognition of advanced assisted driving in automobiles, it is expected that the adoption rate of assisted driving in the catalytic industry will increase rapidly. As a core component supplier, the company is expected to benefit significantly.
Investment advice: I am optimistic that the company will benefit from the recovery of consumer electronic phones and the rapid increase in the penetration rate of intelligent automobiles. Raise the company's profit forecast for 2024-2025 from 604 million/857 million yuan to 706/940 million yuan, and is expected to achieve a profit of 1,219 billion yuan in 2026 to maintain a “purchase” rating. Risk warning: the downstream mobile phone industry is less than expected, the progress of autonomous driving falls short of expectations, and the volume of automobile customers falls short of expectations