Incident: The company released its 2024 quarterly report. In 2024, the company achieved operating income of 1,259 million yuan, up 22.86% year on year, down 7.74% month on month; realized net profit of 170 million yuan, up 111.26% year on year, up 4.34% month on month; realized deducted non-net profit of 158 million yuan, up 156.73% year on year and 8.53% month on month.
Capacity utilization continued to increase, and Q1 net profit doubled year on year: In Q1, the company's revenue grew rapidly year on year. The main reason was that the company's various businesses continued the development trend of the traditional peak season in the second half of 2023, and operating efficiency continued to improve. At the same time, the company's net profit doubled year-on-year, mainly due to:
The business in the field of precision electronic components and new applications is developing smoothly, market orders have increased, and capacity utilization continues to increase. In Q1 '24, the company's gross margin was 36.95%, +4.77pcts year on year; net margin was 15.65%, +5.84pcts year on year, and the company's profitability improved significantly year on year. In terms of expenses, the company's sales, management, R&D and financial expenses in Q1 2024 were 2.04%/5.54%/8.53%/1.87%, respectively, with year-on-year changes of +0.01/+0.21/-0.21/+0.05pct, respectively. Among them, the ratio and amount of management expenses both showed year-on-year increases in Q1 in 2024, mainly due to business growth and increased depreciation of office buildings.
The LTCC business is growing rapidly, and the volume of integrated inductors is imminent: the company has been on the LTCC platform for many years, has strong R&D strength and R&D team, has accumulated a large number of independent intellectual property patent technologies, and has established long-term strategic partnerships with many leading technology companies in the electronics industry around the world. Since 2023, the company's LTCC business has maintained a high growth rate. As demand for localized alternative market applications of high-end electronic components continues to increase, and the requirements for signal management products for high-end models continue to increase, the sales space for the company's LTCC platform series products is expected to be further opened up, and the market share is also expected to gradually increase. At the same time, the promotion of the company's LTCC and integrated inductor products has made great progress, and its supply share at key major customers in various application fields continues to increase; the company's small-size precision inductor products, integrated power inductors and LTCC device products have also entered the release stage. In April 2024, the company stated that demand for its LTCC device products and integrated inductor series products was strong, and the capacity utilization rate remained at a high level.
The automotive business is improving, and automotive products are supplied to many well-known customers: According to Fortune BusinessInsights, the global electric vehicle market is expected to grow to 1.58 trillion US dollars in 2030, and the CAGR of the global electric vehicle market is about 17.80% in 2023-2030. In 2023, the company's vehicle regulation products passed strict review, certification and testing by domestic and foreign automotive electronics customers. The company has now become the world's top automotive electronics manufacturers and an official supplier to many NEV companies; the company's automotive electronics products are widely used in smart driving, smart cockpits, batteries, motors, electronic control and other segments in new energy vehicles, and various categories of products have been supplied in batches. At the same time, the value of bicycles that the company can supply is about a few hundred yuan to 3,000 yuan. With the continuous introduction and breakthroughs of new products and technologies, the value of bicycles that can be used as products is expected to continue to increase in the future. In April 2024, the company stated that its automotive business maintained a continuous growth trend, and the capacity utilization rate of related product lines was in a healthy state.
Upgraded to “Buy” rating: The company is mainly engaged in R&D, design, production and sales of new precision electronic component products. The company's new precision electronic component products have been widely used in communication, consumer, automotive electronics, industrial and control automation, data centers, Internet of Things, new energy and smart homes.
At the same time, the company is implementing a strategic layout for emerging industries such as automotive electronics, energy storage, photovoltaics, data centers, the Internet of Things, and modules. Benefiting from the advent of the interconnection of everything, intelligence, and the new energy industry upgrade of the global “carbon peak and carbon neutrality” policy, application scenarios in downstream markets such as automotive electronics, photovoltaics, and energy storage continue to expand. The electronic components industry is expected to develop further. Demand for the company's integrated inductors and LTCC products is expected to continue to increase, and all business indicators are showing a positive trend. In the future, with the recovery in consumer electronics demand, the boom in the electronic components industry will continue to pick up, and the company's performance is expected to rise again. We are optimistic that the company's integrated inductor business will benefit from a recovery in consumer demand and achieve steady growth, so it was upgraded to a “buy” rating. We estimate that the company's net profit for 2024-2026 will be 826 million yuan, 1,110 billion yuan, and 1.30 billion yuan respectively, EPS 1.02, 1.38, and 1.65 yuan/share, respectively, and PE 24X, 18X, and 15X respectively.
Risk warning: technology research and development risk; risk of exchange rate fluctuations; new product expansion falling short of expectations; increased risk of industry competition.