Key points of investment
Event: On April 25, 2024, the company released its 2023 annual report and 2024 quarterly report.
The 23-year performance was briefly under pressure. 24Q1 increased sharply year on month in 2023. The company's revenue was 5,059 billion yuan, up 0.96% year on year, net profit to mother was 122 million yuan, down 49.04% year on year, gross sales margin 17.6%, up 0.12 pp year on year, net profit margin 1.83% year on year, down 2.51 pp year on year. The company's performance in 2023 was briefly under pressure, mainly due to factors such as weak downstream demand in the consumer electronics and communication connector market and the fact that the construction of the US production base fell short of expectations.
In the first quarter of 2024, the company's revenue was 1,529 billion yuan, up 63.18% year on year, 0.32% month on month, and net profit to mother was 87 million yuan, up 456.11% year on year and 297.22% month on month, mainly due to factors such as increased sales of solar brackets and gradual increase in capacity utilization.
Performance suppression factors have been released one after another, and the company's future prospects are optimistic
In terms of the photovoltaic bracket business, the company's solar bracket business revenue in 2023 was 3.137 billion yuan, up 7.68% year on year, accounting for 62.00% of revenue. As a professional photovoltaic tracking bracket manufacturer, the company's customers include well-known domestic and foreign photovoltaic companies such as NexTracker, GCS, FTC Solar, and Trina Solar. Among them, NexTracker is a leading manufacturer in the global photovoltaic system field, ranking first in the field of photovoltaic tracking brackets. The company is an important supplier of solar tracking brackets, and the cooperative relationship with them is stable. Furthermore, the company lays out the domestic PV market through its subsidiary in Tianjin. In 2023, due to the relocation of production capacity, the company's performance was suppressed to a certain extent. Currently, the US factory is operating and production normally. It is expected that with the boom in the overseas photovoltaic market and the gradual decline in production capacity, subsequent performance is expected to be released at an accelerated pace.
In terms of the connector business, 2023 was affected by weak downstream demand. The company's revenue from this business was 1,784 billion yuan, a year-on-year decrease of 8.53%, accounting for 35.27% of revenue. The company established a development strategy with communication connectors as the core, consumer electronics connectors as an important component, and other connectors such as automobiles as extensions, and actively carried out horizontal expansion and layout. In the field of traditional RJ communication connectors, the company's comprehensive strength is at the forefront of the domestic industry; in the field of high-speed communication connectors, the company is one of the few domestic enterprises that have achieved mass production of high-speed connectors. The QSFP56/QSFP-DD 200G/400G high-speed connectors and high-speed copper connectors produced have been delivered in batches; in the field of consumer electronics and automotive connectors, the company has a series of well-known international customers including Zhengwei, Flextronics, Morse, Full Rise, FCI, etc. Due to the gradual application of communication equipment in automobiles and consumer electronics products, there is a certain degree of overlap between the company's downstream customers in various fields. This provides convenient conditions for the company to integrate into the supply chain system of high-quality downstream customers and expand the layout and category of related products, and also contributes an important impetus to future performance growth.
Release a restricted stock incentive plan to stimulate employee motivation and improve overall efficiency. The company issued a draft restricted stock incentive plan on December 13, 2023. It plans to grant 6.9992 million restricted stock shares to no more than 299 incentive recipients, including company executives, middle management, and core technical (business) personnel, at a price of 18.52 yuan/share. The corresponding assessment year is 2024-2026, and the performance assessment index is that the company's revenue or net profit in 2024-2026 is not less than 30%/50%/70% compared to 2023.
The restricted stock incentive plan will fully stimulate the enthusiasm of management and core executives, and provide long-term development impetus for the company's overall efficiency and business performance.
Profit forecasting and valuation
As overseas production capacity climbs and downstream demand improves, the company's performance is expected to grow rapidly. The company's 2024-2026 revenue is expected to be 75.81, 94.74, and 11.178 billion yuan, up 49.9%, 25.0%, 18.0% year on year, and net profit to mother of 4.02, 5.41, and 662 million yuan, up 229.0%, 34.6%, 22.5% year on year, corresponding to PE 17, 12, 10 times, maintaining a “buy” rating.
Risk warning
Market competition intensifies; order release falls short of expectations; risk of international trade conflicts; product development falls short of expectations, etc.