Incident: The company released its 2024Q1 financial report. During the reporting period, it achieved revenue of 312 million yuan, +40.65% year on year, net profit to mother of 55 million yuan, +96.04% year on year, after deducting non-net profit of 44 million yuan, +148.04% year on year, gross profit margin of 32.83%, year-on-year +5.72 pct.
Single-quarter results exceeded expectations, and cost control was reasonable: The company's single-quarter results exceeded expectations, and gross margin improved significantly year-on-year. We judge that the automobile business was the main contributing driving force. At the same time, the XR business began to gradually generate revenue, and the increase in the share of high-margin businesses drove an increase in overall profitability. The total cost rate during the 2024Q1 period was 16.93%, -3.69pct year on year. Except for the financial expense ratio, all other expense ratios declined to varying degrees, further increasing profits.
The company's automobile+XR business is expected to grow with two-wheel drive: Automotive electronics: The company has cooperated with major automobile customers such as Bosch, BYD, and Great Wall for many years, and related products have been widely recognized by customers and successfully applied in domestic car companies such as independent brands and new forces. The emergence of new intelligent applications in the future is expected to bring more opportunities. Intelligent consumption: The widespread application of technologies such as downstream AI models has further broadened the consumer electronics+smart home market, and innovative applications in the XR field are expected to open up long-term space in the future.
The vertically integrated motor layout further broadens the growth space: The company's motor product development department has completed the development of high-torque DC motors, brushless DC motors, miniature brushless hollow cup motors, and permanent magnet stepper motors. Among them, high-torque DC motors and brushless hollow cup motors have all formed a series of products, which have been successfully used in automotive, medical, humanoid robots, etc. In the 4 mm diameter brushless hollow cup motor research, 8mm permanent magnet stepper motors have achieved automated mass production, and is also actively deploying 3.4 mm and 4.4 mm more challenging products.
Investment advice: The company's performance has exceeded expectations, automotive electronics continues to contribute to growth, and future XR business space can be expected. We expect the company's net profit to be 2.40/334/420 million yuan in 2024-2026, EPS is 1.40/1.95/2.46 yuan/share, and the corresponding PE is 44.12/31.71/25.23 times, maintaining the “increase” rating.
Risk warning: risk that the XR industry will fall short of expectations; risk of falling consumer electronics demand; risk of rising raw material prices.