In '23, the company achieved revenue of about 33.7 billion yuan, an increase of about 7% over the previous year; net profit to mother was 1.97 billion yuan, a decrease of 17% over the previous year. 24Q1 achieved revenue of 7.74 billion yuan, up about 19% year on year; net profit to mother was 289 million yuan, down 39% year on year.
The PCB business is leading the world, and rising industry demand is driving growth. In '23, the company's PCB business achieved revenue of about 23.3 billion yuan, an increase of about 7% over the previous year; gross margin was about 21%, maintaining a high level. According to Prismark data, the company ranked second in FPC revenue in the world and PCB ranked third in the world in '23. PCB products are gradually developing in the direction of high density, small aperture, large capacity, and lightness. Smartphone functional innovations include folding screen phones, which are bucking the trend, driving a rapid increase in stand-alone FPC usage; generative AI has entered mobile phones and computer applications, and 2024 is expected to be the first year of AI phones and AI PCs; the development of the metaverse industry and the new energy vehicle industry will also drive the development of the PCB industry, and the company is expected to make deep profits.
Continuing to focus on the two-wheel drive strategy, the new energy business is developing rapidly. In order to seize the development opportunities of the NEV industry, the company adheres to a two-wheel drive strategy. The company's NEV business developed strongly in '23, achieving revenue of about 6.36 billion yuan, an increase of more than 168% over the previous year; 24Q1's NEV business revenue was about 1.83 billion yuan, an increase of about 56% over the previous year. The company focuses on the core customer layout. Customers include international customers and new domestic car builders, and supports traditional automobile manufacturers to transform into new energy, providing customers with various products and comprehensive solutions such as PCBs, automotive displays, and functional structural components. Currently, the company's technology and production lines have been highly recognized, and the production line has achieved an ideal fixed situation.
Expand global production capacity, acquire overseas subsidiaries, and invest in overseas bases. In '23, the company completed the acquisition of Suzhou Jingduan and Aranda, and continued to expand its product line and strengthen its ability to serve new energy customers in North America. In the same year, the company accelerated the layout of overseas production bases. The Mexican base was successfully put into operation, and construction of the Thai base began to help the company continue to expand production capacity. Among them, the Thai factory mainly revolves around customer needs and will be the company's largest overseas investment base, and mass production is expected to begin in '25.
We forecast the company's 24-26 earnings per share of 1.29 yuan, 1.69, and 2.09 yuan respectively (the original 24-25 forecast was 2.28 yuan and 2.75 yuan, respectively, which mainly lowered the revenue and gross margin forecasts). Based on the comparable company's 24-19 PE valuation level, the corresponding target price was 24.51 yuan, maintaining the purchase rating.
Risk warning
Risk of demand falling short of expectations; risk of PCB board gross margin fluctuations; capacity climbing and technology upgrades falling short of expectations; risk of impairment.