Incident: According to IT House, Apple has reached a partnership with OpenAI, and iOS 18 will introduce generative AI.
On May 27, according to the IT Home website, Apple has reached an agreement with OpenAI to provide a series of generative AI functions for the iOS 18 system this year. It is expected that the partnership with OpenAI will be officially announced at WWDC 2024 to be held next month.
On April 25, the company released a performance forecast. The net profit of 24H1 is expected to be 52.27 to 5.445 billion yuan, an increase of 20% to 25% over the previous year, after deducting non-net profit of 4.789 to 5,077 billion yuan, an increase of 15.3% to 22.2% over the previous year.
The steady growth of consumer electronics is expected to benefit from the mobile phone foundry business and growing demand for AI terminals from major customers.
The company's consumer electronics revenue in '23 was 204.676 billion yuan, accounting for 88%. The company has been deeply involved in consumer electronics for many years and has achieved a “component-module-complete machine” platform-based layout, which will benefit from growing demand for AI terminals. In '21, the company and controlling shareholders completed the acquisition of 100% of the shares in Jiangsu Weichuang and Kunshan Weixin and successfully entered the iPhone OEM business. According to the agreement, 90% of the partnership's net profit over 300 million yuan was divided between the company and its wholly-owned subsidiary Lixun Industrial. Listed companies will enjoy most of the profits, which is expected to increase this year's performance.
The forward-looking layout of the communications business is expected to benefit from increased demand for the Nvidia GB200 NVL72 in the future.
The company's communications and connectivity business revenue in '23 was 14.538 billion yuan, +13.3% year-on-year, accounting for 6%. On March 19, Nvidia released the GB200 chip and GB200 NVL72 based on the new Blackwell architecture on GTC2024. The latter can provide 30 times performance improvement and 25 times more energy efficiency for large language model (LLM) inference loads (compared to the H100 Tensor Core GPU). The company collaborates with leading chip manufacturers to forwardly formulate next-generation high-speed connection industry standards such as 800G/1.6T. It has obvious technical and cost advantages in the fields of high-speed copper cables, cables, etc., and can provide a complete solution of about 2.09 million yuan for the Nvidia GB200 NVL72 single cabinet. The total market size is expected to reach 100 billion yuan, and it is expected that future demand will increase.
The automobile business has become an engine for growth. The value of bicycles can reach 30,000 to 40,000 yuan, and there is room for future growth.
The company's automobile business revenue in '23 was 9.252 billion yuan, +50.5% year-on-year, accounting for 4%. Relying on the accumulation of technical experience in consumer electronics, and deep cooperation with leading domestic and foreign car brand customers to achieve cross-border empowerment in the automotive industry, it has formed four major business lines of automobile harness/connectors, smart cockpit, body electronics, and power management. The value of SmartEV complex wiring bikes delivered by the company in 23 years exceeds 10,000 yuan, and the bicycle value of all products that can be entered is about 3-4 million yuan. The goal is to reach 200 billion yuan in the third five years.
Domestic fruit chain leaders have benefited from the AI wave, strengthened the communications & automotive business circuit, and maintained a “buy” rating.
As a domestic fruit chain leader, the company is expected to benefit from the AI wave. At the same time, it lays out automobiles & communications. The troika goes hand in hand, and there is plenty of room for growth. The company's net profit for 2024-2026 is estimated to be 137.11/171.82/20.620 billion yuan, respectively, corresponding to 24/25/26 PE 16/13/11 times, maintaining a “buy” rating.
Risk warning: terminal demand falls short of expectations; customer concentration; management risk; R&D falls short of expectations, etc.