Core views:
Incident: The company released its quarterly report for '24, achieving revenue of 4,013 billion yuan (YOY -24.87%), net profit attributable to mother of 751 million yuan (YOY -24.41%), and net profit of non-return to mother of 736 million yuan (YOY -24.80%). Gross profit margin 35.55% (YOY-3.96pps), net profit margin 19.79% (YOY-0.27pps).
Comment: Despite a phased year-on-year decline in first-quarter results, I am optimistic about the continuation of the steady growth and positive trend throughout the year.
The company achieved revenue of 4,013 billion yuan in the first quarter, a year-on-year decrease of 24.87% and a year-on-month decrease of 14.89%; net profit to mother was 751 million yuan, a year-on-year decrease of 24.41% and a year-on-year increase of 68.52%. The gross profit margin of 35.55% (YOY-3.96pps), or a net profit margin of 19.79% (YOY-0.27pps), mainly due to a decline in revenue, is less than the margin of gross margin, or indicates that cost control continues to advance. On the cost side, the cost rate for the 24Q1 period was 13.49% (YOY-2.85PPs), and sales/management/R&D expenses decreased by 42.03%/46.87%/26.13% year-on-year respectively, mainly due to related business expenses fluctuating with revenue. On the asset side, the increase in accounts receivable may indicate that downstream demand is gradually picking up. Accounts receivable increased by 14.08% from the beginning of '24; inventory increased 6.96%, and contract liabilities decreased by 17.42%.
On the cash flow side, 24Q1 net cash flow from operating activities - $145 million. Looking ahead to the full year, the economy is expected to pick up in the future, and the budget for the full year of '24 will continue to grow for 23 years. According to the company's announcement, the company's 24-year plan was to achieve revenue of 22.1 billion yuan, an increase of 26% over the 23 budget, a 10% increase over the actual completion of 23 years, and a total profit of 4.110 billion yuan, an increase of 22% over the 23 budget, and a 10% increase over the actual completion of 23 years. The revenue side and profit side budgets for 23 increased by the same 10% compared to the actual completion in '22, or it shows that the company is confident that the growth trend will continue for 23 years. The total revenue and profit budgets for '23 were completed at 114.71%/111.12%, respectively.
Profit forecast and investment advice: EPS is expected to be 1.89/2.35/2.92 yuan/share in 24-26. I am optimistic that the company's connector circuit will continue to rise, demand resonates in the defense sector's informatization construction, collaborative communication industry and new energy sector. Liquid cooling solutions will continue to expand, maintaining a reasonable value of 55.87 yuan/share, corresponding to the 24-year valuation level PE of 30 times, maintaining the “gain” rating.
Risk warning: Market expansion falls short of expectations, equipment demand and delivery expectations are low, policy adjustments, etc.