Key points of investment
Automotive electronics & consumer electronics were the main sources of performance, and 24Q1 revenue/performance both increased year over year. In 2023, the company achieved operating income of 1.06 billion yuan, an increase of 4.64% over the previous year, and achieved net profit of 180 million yuan to mother, an increase of 19.55% over the previous year. According to the downstream sector, it achieved revenue of 633 million yuan, accounting for 52.49% of the company's revenue; in the field of smart consumption, it achieved revenue of 282 million yuan, accounting for 23.35% of the company's revenue; in the communications industry, it achieved revenue of 123 million yuan, accounting for 10.18% of the company's revenue; in the medical and personal care sector, it achieved revenue of 49 million yuan, accounting for 4.03% of the company's revenue; in other fields, it achieved revenue of 120 million yuan, accounting for 9.95% of the company's revenue. 2024Q1 achieved revenue of 312 million yuan, a year-on-year increase of 40.65%, and net profit to mother of 55 million yuan, an increase of 96.04% over the previous year.
Providing multi-core components and drive solutions for automobiles, electrification & intelligence is expected to drive steady growth in the company's performance. It mainly provides precision parts, micro transmission systems, and micro drive products for the automotive electronics industry, including core components and drive solutions such as various actuators, intelligent electronic drive control, and motion control systems. At present, the company has cooperated with major automotive industry customers such as Bosch, BYD, and Great Wall for many years, and has achieved progress in cooperation. The precision parts, transmission systems, and micro drive products provided by the company have received widespread demand and quality recognition, such as vehicle sports screens, car hidden door handles, automobile active lift spoiler, automobile thermal management actuators, vehicle radar, electronic parking (EPB), etc., and related products have been successfully used in domestic car companies such as independent brands and new forces. With the continuous increase in the electrification penetration rate of automotive electronics and the continuous emergence of intelligent innovative applications, the downstream applications of the company's automotive electronic micro transmission systems and micro drive systems are continuously updated and iterated as the market changes, and the application of micro transmission systems and micro drive systems will usher in more development opportunities.
According to data from the China Association of Automobile Manufacturers, in April, production and sales of new energy vehicles completed 870,000 units and 850,000 units respectively, increasing 35.9% and 33.5%, respectively, over the previous year, and reaching 36% of the market share. In January-April, production and sales of new energy vehicles reached 2.985 million units and 2.94 million units respectively, up 30.3% and 32.3% year-on-year respectively, with a market share of 32.4%. In April, domestic sales of new energy vehicles were 736,000 units, down 2.9% from the previous month, up 37.3% year on year; exports of new energy vehicles were 114,000 units, down 8.6% from the previous month, up 13.3% year on year. In January-April, domestic sales of new energy vehicles were 2.52 million units, up 34.4% year on year; exports of new energy vehicles were 421,000 units, up 20.8% year on year.
XR & smart home is the main application field for smart consumption, and the entry of products into Vision Pro is expected to accelerate growth in related fields. With the rapid development of information technology, the acceleration of commercial use of 5G, breakthrough progress in artificial intelligence, and the widespread application of AI models, the consumer electronics industry and smart home market have further expanded. The company actively participates in related application fields, such as AR & VR, smart home and office, to provide customers with competitive products and solutions. At present, the company's products are mainly used in IPD pupil distance adjustment, refrigerator door drive systems, lawn mower robot walking actuator micro drive systems, and floor washer drive systems in the field of intelligent consumption. Among them, IPD pupil distance adjustment has entered Vision Pro. The MegaWei pupil distance adjustment device is a driving device that adjusts the distance between the two lenses of a smart wearable device to match the user's pupil distance. It is mainly used in VR helmets, VR glasses, etc. Through advanced technology and exquisite design, this product simplifies the assembly process, improves transmission efficiency and adjustment accuracy, reduces transmission noise, and at the same time reduces costs and increases efficiency, it can also better guarantee that users obtain better viewing results. Currently, Apple can provide automatic/stepless, independent monocular, and motor drive adjustments. As a global consumer electronics leader, Apple terminal equipment configurations will be compared to major manufacturers. According to Wellsenn XR data, the Vision Pro IPD adjustment module is provided by Zhaowei Mechatronics, and the unit price is $10, for a total of $20 for the whole machine. According to Wellsenn XR data, global VR sales in Q1 2024 were 1.72 million units, down 9% year over year. The main reason for the decline in sales in the first quarter was mainly due to Meta, Sony PS VR2, and PICO. Among them, Meta sales fell 10%, Sony PS VR2 fell 57%, and Apple Vision Pro sold 290,000 units in the first quarter, partially compensating for the decline in sales of Meta, Sony PS VR2, and PICO. Meta added Quest orders to upstream supply chain companies in the first quarter, including Quest Pro, Quest 3, and Quest 2 upgraded Quest 3 S (Lite) released in the fourth quarter. Meta's annual sales volume is expected to exceed 6 million units in 2024. The global sales volume is expected to reach 8.44 million units in 2024, an increase of 12% over 2023. In 2024, the VR market will reverse the declining sales trend of the past two years and return to a positive growth trajectory, but the VR industry will still be in a small year of sales this year and next.
Investment advice: In view of the current semiconductor downstream recovery process, we have adjusted our original performance expectations. Revenue from 2024 to 2026 is estimated to be 15.69 (previous value 16.57) /20.52 (previous value: 22.17) /25.89 billion yuan (increase), with growth rates of 30.1%/30.8%/26.2%, respectively; net profit to mother of 2.31 (previous value 2.55) /3.05 (previous value was 3.46) /3.97 billion (new) yuan (increase), with growth rates of 28.6%/31.6%/30.3%, corresponding PE 53.0/40.3/30.9, respectively. Considering that the company is a scarce target in the domestic micro transmission industry, and that its design, development and manufacturing technology, product performance and quality are at the forefront of the industry, and are highly recognized by the industry and downstream customers (Bosch, Huawei, Vivo, OPPO, Xiaomi, iRobot, etc.), the future automotive electronics and XR markets will continue to grow, providing space for the company's performance growth. Maintain an “Accumulated Holding-A” rating.
Risk warning: risk of macroeconomic fluctuations; downstream demand falls short of expectations; development progress of new products and technologies falls short of expectations.