Event: In 2023, the company achieved operating income of 231.905 billion yuan (YoY +8.35%), achieved net profit of 10.953 billion yuan (YoY +19.53%), and net profit of non-return to mother of 10.186 billion yuan (YoY +20.65%). 1Q24 achieved revenue of $52.407 billion (YoY +4.93%); net profit attributable to mother of $2,471 billion (YoY +22.45%); net profit after deducting non-attributable net income of $2,183 billion (YoY +23.23%).

At the same time, the company announced the 1H24 profit forecast. Net profit to mother is estimated to be 5.227 billion yuan to 5.445 billion yuan, a year-on-year increase of 20% to 25%.

Financial dimension: Stable performance for 23 years, increased dividend ratio. In 2023, the company achieved revenue of 1971.83/145.38/74.92/9.252 billion yuan, or +9.252 billion yuan, +9.75%/+13.28%/-33.58%/+50.46% compared with the same period last year. At the same time, the company increased its dividend ratio and plans to distribute cash dividends of 2.53 billion yuan, with a dividend payment ratio of 19.66%.

Business dimension: Leveraging the advantages of vertical integration and collaboration. In the consumer electronics sector, the company relied on vertical integration and horizontal mergers and acquisitions to achieve substantial breakthroughs in improving core consumer electronics capabilities and expanding business scale. Based on current deep experience and technical reserves in SMT, SiP, etc., the company has acquired all assets of the US radio frequency (RF) front-end chip manufacturer Weixun Joint Semiconductor (Qorvo) in Beijing and Dezhou, Shandong, to further cultivate the company's precision manufacturing capabilities in RF front-end modules and strengthen vertical integration service advantages, and promote the company to achieve leapfrog development from system packaging to module packaging; in the communications and data center sector, the company collaborates with leading chip manufacturers to forwardly develop 800G and 1.6T for mainstream data centers and cloud service providers around the world With the next generation of high-speed connection standards, products in some segments, such as external high-speed copper cables, cables and connector components, backplane connectors and backplane cables, HSIO, and SSIO, have won customer recognition with leading technology, cost advantages, and excellent product performance. On this basis, products such as optical connectivity, heat dissipation, and power modules are comprehensively promoted to further in-depth cooperation with leading customers; in the automotive sector, the company combines a deep understanding of the safety and reliability of vehicle-grade products to quickly achieve cross-border empowerment of products related to the automotive industry, and has opened up a wide range of products related to the automotive business (high/low voltage wiring harnesses, high-speed wiring harnesses, charging guns, automotive connectors, smart cockpit controllers, LCD meters, 3-in-1 motor systems, AR HUD, DMS, etc.) Market space.

Profit forecasts and investment recommendations. The company still follows the “three five years” strategic guidance, strengthens the development of existing businesses and the forward-looking layout of new fields, new technologies and new products, and relies on the advantages of independent research and development of precision intelligent manufacturing platforms and process processes to achieve mutual integration and interoperability of the company's resources in the fields of consumer electronics, communications, automobiles, etc., to create a complete vertical integration and closed loop of the industry, and promote the steady development of the company's operations in the expected direction. We expect Lixun Precision's EPS to be 1.88, 2.48, and 3.01 yuan respectively from 2024 to 2026. Based on the valuation situation of comparable companies, Lixun Precision was given a PE valuation of 20-23 times in 2024, with a corresponding reasonable value range of 37.60-43.24 yuan, giving it a “superior to the market” rating.

Risk warning. The risk that the NEV market is developing slowly or falls short of expectations; risks brought about by slowing 5G construction progress or policy changes; and demand in the consumer electronics market falls short of expectations due to the global macroeconomic downturn.