Description of the event
On April 22, the company released its 2023 annual report and 2024 quarterly report. The company achieved operating income and net profit of 31.29 billion yuan and 356 million yuan respectively in 2023, and 2024Q1 achieved operating income and net profit of 10.40 million yuan and 162 million yuan respectively. The year-on-year growth in the single quarter was 68.77% and 244.43% respectively, respectively, with year-on-year increases of 12.54% and 48.77%, respectively.
Incident comments
Looking at revenue growth drivers in terms of business splitting. The company's growth in the first quarter was mainly due to continued high growth in the automotive business. The traditional main business of the consumer electronics business benefited from improved industry sentiment and the availability of new machines from major customers. New BTB and e-cigarette module products were released significantly in the first quarter. Along with the recovery in downstream demand, the company's soft board business achieved high revenue growth in the first quarter, and two-wheel drive in the consumer electronics and automotive business led to a sharp increase in the company's overall revenue and profit in the first quarter.
Company business structure in 2023: RF connectors and cable components business revenue of 799 million yuan, revenue accounting for 25.55%, yoy -8.48%; electromagnetic compatibility business revenue of 796 million yuan, revenue accounting for 25.43%, yoy -1.04%; soft board business revenue of 311 million yuan, revenue accounting for 9.93%, yoy -23.72%; automotive connector revenue of 823 million yuan, revenue accounting for 26.32%, yoy +60.06%, other business revenue of 400 million yuan, revenue accounting for 12.77% , yoy +7.96%.
Looking ahead to 2024, we judge that the company as a whole is expected to achieve high growth. In the automotive business, the company has achieved multiple breakthroughs and occupied a high share of traditional car companies, new forces, and H customers, ensuring an increase in the profit contribution of the automobile business in recent years. The traditional consumer electronics and new product business is expected to achieve high growth, and the profitability of the new BTB and e-cigarette module business is worth looking forward to. Furthermore, the soft board business is expected to return to growth along with the recovery of the IOT industry throughout the year.
Benefiting from intelligent automobiles, we have created the company's second growth curve. With the spread of automobile intelligence and the upgrading of intelligent driving levels from L2/L3 to L4/L5, the number of devices such as lidars, cameras, and screens has increased dramatically, and the amount of data transmitted within cars has surged, stimulating demand for high-frequency high-speed connectors. Currently, the company's customers are mainly domestic brands such as Great Wall, Changan, Geely, and BYD. In the certification of major overseas customers, the company and H customers are deeply tied to intelligent driving platform connectors and participate in the early development of their lidar connectors, so there is a certain endorsement effect on certifying other domestic lidar manufacturers. Compared with international manufacturers such as Rosenberg and Tyco Electronics, the main advantage of electric connection technology is that it brings faster product iteration speed in response to customers and high investment, and can maintain or even exceed the iteration speed of major international manufacturers. Future increases in the company's automation rate and scale effects are expected to further control costs and enhance the profitability of the automotive connector business. We expect the company's net profit to be 6.03 billion, 7.98 billion yuan, and 1,010 million yuan respectively in 2024-2026, maintaining the company's “buy” rating.
Risk warning
1. Demand for consumer electronics falls short of expectations;
2. Demand for automotive connectors fell short of expectations.