Incident: The company released its annual report for the year 23 and quarterly report for 24Q1. 23, the company achieved revenue of 5.17 billion yuan (+15.8%) and net profit to mother of 400 million yuan (+0.8%); of these, the 23Q4 alone achieved revenue of 1.61 billion yuan (+43.7%) and net profit to mother of 90 million yuan (+63.4%). In 24Q1, the company achieved revenue of 1.36 billion yuan (+51.1%); net profit to mother of 120 million yuan (+37.7%), and there was a steady increase in performance.

Actively expanding overseas markets, the 24Q1 performance was outstanding. The company's performance increased steadily throughout '23, with outstanding performance in 24Q1, mainly due to increased product orders and a steady increase in market share. 1) By product, the company's chargers/portable energy storage and other/new energy vehicle electronic control products and solutions achieved revenue of 39.6/6.7/550 million yuan respectively, +12.7%/+13.0%/+50.4%, respectively. Among them, business revenue in the non-charger sector increased significantly, accounting for 23.5% from 21.4% in '22. 2) In terms of profit margins, the company's gross margin/net margin in '23 was 22.3%/8.5%, respectively, +0.5pp/ -1.4pp year-on-year, respectively, and remained stable. 3) In terms of cost rates, the company's cost-side control effect is good. The company's sales/management/R&D expenses in '23 were 3.2%/4.2%/6.0%, respectively, +1.2pp/+0.4pp/+0.5pp compared to the same period. The company attaches great importance to R&D. The R&D expenses for 23 years were 310 million yuan, an increase of 26.2% over the previous year. The company is actively expanding overseas markets and overseas business, accounting for 33.7% of export revenue in '23, +2.8pp. At the same time, revenue from high-margin products achieved relatively rapid growth, and the gross margin of the non-NEV sector increased by 1.1 pp.

All businesses are progressing smoothly, and the future is promising. The company focused on the three major fields of consumer electronics, new energy vehicles, and digital energy. Various businesses progressed smoothly during the reporting period. 1) In the consumer electronics sector, the company has developed a variety of industry-leading new products, various high-power chargers have become standard for the brand's flagship mobile phones, and has established stable cooperation with many top brand customers at home and abroad in application fields such as security, laptops, and wearable devices. 2) In the new energy vehicle sector, by the end of the reporting period, the company's products had achieved targeted mass production of more than 100 models for 30 customers, including traditional car companies and new power car companies, and distributed electronic control had more than 1 million units of development and supporting experience. The company uses the accumulation of passenger car technology to provide electronic control system solutions in markets such as electric vertical take-off and landing aircraft and electric mining cards. As the penetration rate of electrification in various industries increases, it gradually expands its market share and creates high-margin products. 3) Energy storage sector. During the reporting period, the company successfully developed various products, and products such as energy storage systems and integrated charging/discharging guns were mass-produced and sold. The company actively develops business in the field of data center server power supplies and develops cost-effective, high-reliability, and wide-range high-efficiency server power supplies.

Profit forecasting and investment advice. We expect the company's net profit to be 6.3/8.3/940 million yuan in 24-26, and the compound net profit growth rate for the next three years is expected to reach 28.7%. Considering that the company's new product development is progressing smoothly and the market share is steadily increasing, while the charger business is growing steadily, the NEV and energy storage business are expected to continue to inject momentum into growth. We gave the company 20 times PE in 2024, corresponding to a target price of 45.4 yuan, for the first time, a “buy” rating.

Risk warning: Risks such as R&D progress falling short of expectations, industry demand falling short of expectations, exchange rate fluctuations, etc.