Incident Overview
On June 18, Baiwei Storage released its 2024 semi-annual performance forecast. In the 2024 semi-year, it achieved operating income of 3.1 billion yuan to 3.7 billion yuan, an increase of 169.97% to 222.22% over the previous year; net profit attributable to owners of the parent company was 280 million yuan to 330 million yuan, an increase of 194.44% to 211.31% year on year.
Analytical judgment:
Successfully expand first-line customers and accelerate revenue growth.
Since 2019, the company's revenue has continued to grow. The revenue CAGR for the past 5 years was +32.25%, while the 24H1 revenue side achieved accelerated growth. According to the performance forecast, 24H1 has closely grasped the upward opportunities in the industry, vigorously expanded first-line customers at home and abroad, achieved breakthroughs in market and business growth, and greatly increased product sales over the same period last year. Q2's revenue for a single quarter is expected to be about 13.73 billion yuan to 1,973 billion yuan, a year-on-year increase of about 90.01% to 173.02%, and about -20.46% to 14.29% month-on-month. According to Jibang data, Q2 global mobile phone production is expected to decline 5%-10% month-on-month. Therefore, we believe that eliminating the relative decline in Q2 demand, the company's revenue performance is in line with our previous expectations.
We judge that in the second half of the year, with the arrival of the peak demand season, the company's overall revenue will continue to grow at an accelerated pace this year.
Storage prices have risen, and the company's profit side has performed well.
As storage prices continued to rise, the company completely turned a loss into profit after entering 2024. According to the performance forecast, the net profit attributable to mother in Q2 is expected to be about 1.12 to 162 million yuan, a year-on-year increase of about 165.96% to 195.30%, which is higher than the year-on-year growth rate on the revenue side. We believe this is due to the company's inventory management at the bottom of the 23-year storage price, which reflects the company's effective judgment on market trends; Q2's net profit attributable to mother in a single quarter was about -32.90% to -3.06% month-on-month. According to Jibang data, the Q2 storage price increase was about 13%-20%, slightly lower than the price increase in Q1. We think Q2 is about 13%-20%. The convergence of the difference between average inventory price and average sales price, combined with falling demand, was the main reason for the month-on-month decline in Q2 profit.
Overall, we believe that 24H1's profit side performance is better than expected, and profitability is expected to increase to a certain extent as the use of self-developed chips and the growth of the packaging and testing business in the future.
Storage prices are expected to continue to rise, and the advanced sealing and testing business can be expected in the future.
According to Jibang data, storage prices are expected to rise 8% to 26% in the second half of the year. Based on the company's 24H1 performance, we judge that the company's downstream demand is expected to grow further in the second half of the year, and the unit price of the product is also expected to continue to rise, thus achieving a sharp rise in volume and price at the operating level.
The company continues to increase R&D investment in fields such as advanced sealing and testing equipment. We expect that the company's advanced sealing and testing business is expected to develop rapidly and will become the second growth curve for the company's future business.
Investment advice
Considering that the company's storage business performance was better than expected, the company's 2024-2026 revenue forecast of 60.16/76.54/8.888 billion yuan was raised to 6.533/83.05/9.60 billion yuan, and the 2024-2026 EPS forecast of 0.96/1.62/2.02 yuan was raised to 1.06/1.77/2.20 yuan. Corresponding to the closing price of 56.73 yuan/share on June 18, 2024, PE was 53.62 times, 32.05 times, and 25.83 times, respectively, from 2024 to 2026, maintaining the company's “gain” rating.
Risk warning
Storage price increases fell short of expectations; the company's business growth fell short of expectations; industry competition intensified; fixed increase plans have not yet been completed, and there is some uncertainty.