Key points of investment
Incident: In the first quarter of 2024, the company achieved operating income of 909 million yuan, an increase of 30.88% over the previous year, and a net profit of 144.59 million yuan to mother, turning a loss into a profit after deducting a net profit of 6.046,800 yuan from non-return to mother.
The recovery of notebook computers was “suppressed” first. According to TechInsights statistics, in the first quarter of 2024, global laptop shipments increased 7% year-on-year to 46.1 million units. It can be seen that the trend of laptop recovery has gradually become clear, but what is lacking in the US and China is that compared with shipments in the fourth quarter of 2023 (51.9 million units), there has been a month-on-month decline, excluding off-season factors. We believe that in the process of upgrading from traditional PCs to AI PCs, consumers are switching machines during the unfinished transition period of “old and new” Time is more inclined to wait and see, making the recovery of notebook computers weaker than industry expectations, which in turn affects the pace of preparation of terminals and the industrial chain. Under the overly optimistic preparation guidelines of terminal manufacturers, pressure has been placed on suppliers in terms of inventory calculation and depreciation. In this context, although Chunqiu Electronics turned a year-on-year loss into a profit in the first quarter, the recovery in performance was still affected to a certain extent. We anticipate that with the successive release of AI PC products by terminal manufacturers, the recovery of the laptop market is expected to gradually accelerate, and Chunqiu Electronics is expected to fully benefit as the world's leading supplier of laptop structural components.
The demand for lightweight AI PCs has increased, and the forward-looking layout of magnesium structural parts has consolidated its position on the laptop side. The demand for lightweight structural parts has always existed. The material has evolved from plastic in the past to aluminum alloy, and is currently being further upgraded to lightweight materials such as magnesium alloy and carbon fiber. Predictably, in the future, AI PCs will continue to increase in demand for power consumption, heat dissipation, etc., and as batteries and cooling structures increase, in order to control the weight of the laptop, the exterior structural parts need to be further reduced without affecting the heat dissipation of the entire laptop, and the use of magnesium alloy structural parts is currently the most suitable method that can be seen. The ThinkBook 13x Gen 4 with AI enhanced features launched by Lenovo at the beginning of the year is the world's first laptop made of high-gloss stainless magnesium. Chunqiu Electronics was originally a core supplier of laptop exterior structural components around the world. In the past two years, the layout of magnesium alloy semi-solid injection molding processes has been in a leading position in the country. In the future AI PC era, the company's supply position is expected to be further consolidated, thus achieving growth above the industry average.
The automotive magnesium alloy structural parts business is growing steadily. The second growth curve has already been formed. In order to improve battery life, new energy vehicles are undergoing lightweight upgrades. Using magnesium alloy structural parts is an effective method. With the continuous deepening of the layout of semi-solid injection model processes, the company now has central control instrument screen backpanels and production capacity for vehicle structural parts of various sizes, and has signed a strategic cooperation agreement with Desiwei. In the future, as the process size continues to increase, it is expected that larger magnesium parts such as CCB beams and motor housings will be laid out. The weight reduction of magnesium alloy parts is an important trend in the development of new energy vehicles and is expected to become a new performance growth point.
Investment advice: The company's net profit for 2024-2026 is estimated to be 166 million, 251 million and 356 million yuan, respectively. The current stock price corresponds to PE of 23.14, 15.32, and 10.79 times, which is covered for the first time, and a purchase rating is given.
Risk warning: 1. The recovery in notebook demand continues to slow down; 2. AI PC promotion is insufficient; 3. The penetration of magnesium alloy structural parts of new energy vehicles falls short of expectations.