occurrences
The company announced full-year 2023 and 2024Q1 results. In 2023, the company achieved revenue of 4.519 billion yuan, +1.96% year-on-year, net profit to mother of 496 million yuan, +14.17% year-on-year, and net profit of 489 million yuan after deducting non-attributable net profit of 489 million yuan, or +12.35% year-on-year. 2023Q4 achieved revenue of 1.17 billion yuan, +7.43% year over year, net profit to mother of 121 million yuan, -10.92% year on year, net profit after deducting non-return to mother of 123 million yuan, -10.47% year on year.
2024Q1 achieved revenue of 1,093 million yuan, +7.71% year-on-year, net profit to mother of 109 million yuan, +44.73% year-on-year, net profit of 108 million yuan after deducting net profit of non-return to mother, +45.90% year-on-year.
Comment:
Deeply involved in the steady management of PCBs, and the 24Q1 performance increased. The company has been deeply involved in the automotive PCB business for more than ten years and has won market recognition for its good quality and service. After years of brand management, the company has accumulated a large number of high-quality and stable customers, including leading companies such as Tesla, Panasonic, Mitsubishi, Bosch, and Dyson, and has an advantageous position in industry competition. 2024Q1's business scale grew steadily, with the release of production capacity from fund-raising projects, achieving revenue of 1,093 billion yuan, +7.71% year over year; benefiting from continuous optimization of product structure and increased exchange revenue, 2024Q1 achieved net profit of 109 million yuan, +44.73% year over year, gross margin increased to 20.48%, +1.45 pct year on year, and net profit margin increased to 9.93% year on year, +2.54 pct year on year.
It has the ability to mass-produce AI server PCBs and is expected to open up a second growth curve. In the digital communication field, the company has achieved mass production capacity for 24-layer hard boards, 5-stage HDI (including any layer interconnection), 6oz thick copper multi-layer boards, multi-layer soft boards, and multi-layer HDI soft and hard boards, which basically cover the process requirements of PCBs required for mainstream AI servers, and cooperate with leading customers in the international technology industry to mass produce related PCB products. The company is currently actively importing other AI server leading customers, which is expected to shape new advantages and open up a second growth curve.
Production capacity for fund-raising projects has been released, and Tesla's main supplier status guarantees future growth. The production capacity of the first phase of the company's new circuit board project with an annual output of 3 million square meters has been steadily climbing. The capital raised for the second phase of the project was ready in March 2024. The company's production and sales rate for the year 2022 to 2023 was 97.01%/102.03% respectively, the sales volume in 2023 was +1.05%, the inventory volume was -30.14% year over year, and the production capacity release was good and sufficient. As Tesla's main PCB supplier, the company provides Tesla with key component products covering the electric vehicle tri-electric field, and has entered the supply chain for new products such as Tesla photovoltaics, energy storage, and Dojo to ensure the company's future growth.
Increasing overseas layout and investing in factory construction is expected to continue to strengthen the competitiveness of the industry. In order to increase the layout of overseas factories, the company plans to invest no more than 200 million US dollars in a new factory in Thailand. Relying on Thailand's good location and industrial base, and compounding the comparative advantages of local land, plant, manpower, and taxation, the project will further expand the company's international business after implementation to better develop and meet the needs of overseas customers, and is expected to continue to enhance the company's size and industry competitiveness.
Profit forecast and investment rating: We expect the company to achieve operating income of 52.84/61.69/7.198 billion yuan in 2024-2026 and net profit to mother of 6.10/7.45/853 million yuan, corresponding PE of 19.41/15.91/13.89 times, maintaining the “buy” rating.
Risk warning: Product development falls short of expectations; downstream demand falls short of expectations; industry competition intensifies