Deeply involved in precision manufacturing, endogenous+epitaxial growth has created leading enterprises:
Starting with consumer electronics connector products, the company continuously deepens and horizontally expands its capabilities and product fields through intensive R&D investment and epitaxial mergers and acquisitions, and continuously explores the depth of value through forward or reverse vertical integration from parts and modules to systems.
Currently, the company's business covers consumer electronics, automobiles, communications and medical sectors. It has many leading global customer resources, and has become a “big and strong” leading precision manufacturing enterprise.
AI empowers terminals, resonates with the recovery cycle, and grows to a new level:
The AI model is developing rapidly. Since the second half of 2023, various brand manufacturers have been actively launching consumer electronics terminal products with integrated AI functions. By empowering smart terminals such as mobile phones, PCs, and pads, the AI model is expected to help consumer electronics terminals achieve a more convenient, more personalized, and safer user experience, increase terminal sales, and resonate with the recovery cycle. Relying on its deep technology accumulation, high-quality customer resources, and rapid large-scale mass production and cost control capabilities developed over many years of intensive consumer electronics, the company is expected to deeply benefit from the wave of switching brought about by AI.
The construction of AI computing power is in full swing, and the company's communications business has broad prospects:
Based on the scaling law, the number of parameters for generative AI training is increasing, driving the demand for higher performance computing resources, and AI data center construction is in full swing. According to Bloomberg, the global generative AI industry's revenue in 2022 will grow to $1.3 trillion by 2032, accounting for 12% of all technology spending. The company has comprehensive product capabilities in the computing power center scenario, extending from multiple types of components and module products to complete server assembly, and continues to provide original development and has an extensive and in-depth patent layout for optical, electrical transmission and power products with low speed and high speed IO interfaces. The company's products cover inter-cabinet interconnection solutions, overall in-cabinet solutions, server and switch solutions, and the business prospects are broad.
The “new four modernizations” of automobiles are on the rise, making steady progress towards the automotive Tier 1 leading goal:
The electrification, intelligence, connectivity and sharing of automobiles are progressing steadily, and the value of automotive electronics is constantly increasing. On the basis of endogenous research and development, the company actively uses epitaxial mergers and acquisitions of auto parts manufacturers to continue to rapidly improve its product layout and consolidate its comprehensive competitive strength. Based on the automotive “nervous system” system, the company further expands product lines such as connectors, new energy, smart cockpits, and intelligent connectivity, using cooperative vehicle ODM platforms as a gateway and entry point, continuously refines its Tier 1 capabilities, and strives towards the medium- to long-term goal of becoming a leading global automotive parts tier 1 manufacturer.
Investment advice:
We expect the company's revenue growth rates from 2024 to 2026 to be 15.36%, 12.77%, and 14.99%, respectively, and net profit growth rates of 19.61%, 28.89%, and 24.04%, respectively. We maintain the company's buy-A investment rating, with a 6-month target price of 45.50 yuan, which is equivalent to a dynamic price-earnings ratio of 25.00x in 2024.
Risk warning: Consumer electronics terminal sales fall short of expectations, computing power construction falls short of expectations, risk of increased industry competition, and risk of relative concentration of customers.