Introduction to this report:

The company's 2023 annual report was in line with expectations. The performance in 1Q24 was outstanding. The single-quarter performance reached a record high. The trend of upgrading automotive acoustics continued to be realized, process optimization and scale effects were compounded by external factors, and profitability continued to improve.

Key points of investment:

Maintain the increase rating and maintain the target price of 47.4 yuan. Maintain the company's 2024-2025 EPS forecast at 1.58/2.14 yuan, and add the 2026 EPS forecast to 2.63 yuan. Considering the company's product upgrades in the automotive acoustics field, it is expected to achieve a sharp rise in volume and price, and the valuation is higher than that of comparable companies. It will give 30 times PE in 2024, maintain the target price of 47.4 yuan, and maintain an increase rating.

The 2023 annual report was in line with expectations, and revenue performance grew rapidly. The company's revenue in 2023 was 2.33 billion yuan, up 31.5%; net profit to mother was 160 million yuan, up 82.4%; deducted from non-return mother 160 million yuan, an increase of 140%. The 2023 annual report was close to previous forecasts, and revenue performance was in line with expectations. 4Q23 revenue was 730 million yuan, an increase of 29%, and net profit to mother was 50 million yuan, an increase of 81%. The car's acoustic system was upgraded, new orders were released, and revenue performance grew rapidly. In 2023, sales of car speakers and amplifiers were 79.07 million units and 420,000 units, up 18.3% and 24.1% respectively.

1Q24's performance reached a new high, and the number of key customers continued to increase. In 1Q24, the company achieved revenue of 600 million yuan, an increase of 32%, net profit of 60 million yuan, 95 percent increase after deduction of 40 million yuan, and an increase of 51%. Deliveries of new vehicles to the company's key customers, such as Huawei, Ideal, and Xiaomi, continued to rise, new customer orders were released, compounded by profit improvements, and the company's quarterly performance reached a new high.

Profitability performance is impressive, and quantity and quality have risen sharply. The company's 1Q24 gross profit margin was 24.7%, the net profit margin was 9.8%, and the same increase was 3.2 pct. External disturbances were mitigated, the process was improved, the automation rate was increased, and the price of some products was adjusted, and profit quality gradually showed. In 2023, the gross profit margin of car speakers was 28.1%, the same increase of 7.6pct, the gross profit margin of automotive amplifiers was 15.6%, a decrease of 0.1 pct. The gross profit margin of AVAS was 16.3%, and the gross profit margin of AVAS increased by 1.9 pcts.

Risk warning: Prices of raw materials have risen, and sales of new products have fallen short of expectations.