The company achieved operating income of 231.9 billion yuan, +8.35% year over year; realized net profit of 11 billion yuan, +19.53% year over year; 24Q1 achieved operating income of 52.4 billion yuan, +4.93% year over year; and realized net profit of 2.5 billion yuan, +22.45% year over year. At the same time, the company's mid-year report expected profit of 52.27 to 5.445 billion yuan, an increase of 20% to 25% over the previous year. Judging from the Chinese report, the company's 24-year growth is expected to exceed market expectations.
By business, the PC industry's overall slump in shipments in '23 dragged down the company's revenue growth. Major customers may have upgraded the Mac series to M4 chips in '24, enhancing its artificial intelligence capabilities, which is expected to drive the improvement of the overall PC business; on the one hand, the revenue growth rate of the car interconnection business reached 50%. On the one hand, the company's cooperation with key customers gradually deepened, and smart cockpits and related domain controller products began to be shipped to key customers; in the field of communications and data centers, the company has formed a deep technical accumulation, covering copper connections, optical connections, cooling modules, servers, and communication radio frequencies The sector showed a significant growth trend.
In the consumer electronics sector: 1) The assembly revenue of airpods and watches in '23 was relatively flat compared to 2022. With the introduction of products such as new Bluetooth headsets and new AI health testing watches by customers in 24-25, the company's wearable business is expected to regain growth momentum. 2) Modules and components benefit from the increase in the share of large clients and breakthroughs in new products, contributing to the company's important revenue growth; 3) In the Vision Pro headset business, we predict that in 23 years, the company's shipments to major customers will be around 180K, corresponding revenue of about 2 to 2.2 billion dollars, and yield will rise slightly, which may have a slight impact on the company's gross margin in the short term.
Q1 The mobile phone assembly business slightly exceeded expectations. 24Q1 With overall shipments falling year on year, it is estimated that the company's mobile phone assembly in the first quarter still had significant year-on-year growth, indicating that the company's share of assembly for major customers increased significantly. We estimate that the company is expected to exceed 60 million mobile phone assembly for major customers this year, which is a significant increase in the company's profits.
Investment advice and profit forecasting
We forecast the company's net profit for 24-25 to be 13.716 billion yuan and 17.58 billion yuan, an increase of 25% and 28% year-on-year. 20xPE was given, corresponding to a target share price of 38.2 yuan, maintaining a “buy” investment rating.
Risk warning
Downside risks: slow global economic recovery, increased competition for domestic mobile phones, supply chain policy risks from major customers, and internal management risks brought about by business expansion
Upside risks: Continued improvement in the global macroeconomic environment; the AI process of mobile phones accelerates; XR sales exceed expectations; sales of new wearable products exceed expectations