Incident: Feirongda released its 2023 annual report and 2024 quarterly report: the company achieved revenue of 4.346 billion yuan (YoY +5.37%), net profit of 103 million yuan (YoY +7.31%), net profit net profit of 81.72 million yuan (YoY +985.24%), gross profit margin 19.47% (YoY +2.15pct), net profit margin 2.37% (YoY +0.04pct), net operating cash flow of 591 million yuan (YoY +4952.46%); 24Q1 achieved net operating cash flow of 591 million yuan (YoY +4952.46%); 24Q1 achieved net operating cash flow of 591 million yuan (YoY +4952.46%). Receive 982 million yuan (YoY +27.05%), net profit attributable to mother of 23.64 million yuan (-25.12 million yuan in 23Q1), net profit of 20.38 million yuan (23Q1 was -34.52 million yuan), gross profit margin 16.93% (+1.07pct year on year), net profit margin 2.41% (YoY +5.66pct).
The share of consumer electronics revenue has increased significantly, and thermal management materials and devices are growing rapidly. By industry, the company's consumer electronics, communications sector, and new energy (new energy vehicles, photovoltaics, energy storage, etc.) accounted for 38%, 27%, and 35% of revenue in '22, respectively. Among them, the consumer electronics business was affected by the return of major customer business market share and accelerated localization substitution. In addition, the number of orders in this field continued to increase. In addition, notebook computers further pursued the coexistence of lightweight, portable and high-performance cooling, and the demand for cooling increased dramatically, and the company's related business continued to grow. By product: In '23, the company achieved revenue of 1,176 billion yuan (YoY +5.69%), gross margin of 23.06% (YoY +3.32pct); base station antennas and related devices achieved revenue of 308 million yuan (YoY +3.32pct); gross margin of 2.80% (YoY -1.24pct); thermal management materials and devices achieved revenue of 1.73 billion yuan (YoY +23.28%); protective devices achieved revenue of 4.36 billion yuan 100 million yuan (+12.93%), gross margin was 30.56% (YoY +1.28pct); lightweight materials and devices achieved revenue of 496 million yuan (-4.43% YoY), and gross margin was 13.69% (YoY 5.95pct).
The scissor gap between gross margin and the three-rate rate continues to rise. The company's 23Q1-Q4 gross margin was 15.86%, 19.64%, 19.98%, and 20.89%, respectively, showing a quarterly upward trend. In terms of cost ratio, the company's 23Q1-Q4 sales management and research rates were 19.45%, 15.64%, 13.62%, and 12.98%, respectively. The scissor difference between gross margin and the three rates became more obvious with the month-on-month increase in revenue scale. In addition, due to exchange rate fluctuations, the company's exchange earnings in '23 decreased by 40.92 million yuan year on year, and financial expenses increased by 16.38 million yuan year on year.
Profit forecast and investment suggestions: We expect the company's revenue for 2024-2026 to be RMB 5,093 billion, RMB 5.828 billion and RMB 6.596 billion, with net profit to mother of RMB 282 million, RMB 371 million, RMB 450 million, and EPS of RMB 0.49, RMB 0.64 and RMB 0.78, respectively. Referring to the company's historical valuation and the average valuation level of comparable companies, the company was given a 2024 dynamic PE range of 38-40X, corresponding to a reasonable value range of 18.51-19.48 yuan, which is “superior to the market” rating.
Risk warning: Market competition intensifies; capacity expansion falls short of expectations; liquid cooling industry penetration falls short of expectations.