Incident: On July 4, 2024, Xingrui Technology announced that it plans to establish a subsidiary and invest in the construction of a production base in Thailand. The first phase of the project plans to invest no more than 11 million US dollars. The project is mainly aimed at implementing the company's automotive electronics and server structural parts business.
The forward-looking layout of servers and AI terminals is expected to become a new growth pole for the company's performance: the company has gradually established servers and AI terminals as the second growth curve, and is currently planning subsidiaries and production capacity expansion for server products. Following previous foundry customers in the smart terminal and consumer electronics sector, the company gradually entered the server supply chain system. Terminal products expanded from PC servers to AI servers. The terminal customers include A customers, Dell, etc., and the product capacity covers thousands of structural products such as chassis and cabinets. It is expected that products such as server cooling modules and power structure components will be superimposed later. There is still room for improvement in the value of the company's stand-alone server products. Compared with other structural component manufacturers, the company has stronger comprehensive capabilities such as rapid client response, product development and design, and integrated production. Currently, it is continuously expanding AI and server-side customer and product capabilities through the hands of American/**** foundry customers. Currently, higher ASP server structural products are being developed for core customers. In the future, along with the accelerated deployment of AI end-side products, the acceleration of server construction, and the release of demand for related structural products, the company is expected to achieve both an increase in orders and production capacity, and usher in a new performance growth pole.
The automotive electronics business has entered a period of high performance growth: the company is a leading domestic enterprise in the injection molding process for new energy vehicle inserts. The value of bicycle products available has reached 2,000 yuan. Customers have expanded from established overseas battery and electric drive suppliers such as Panasonic and Nidec to domestic Huichuan, CRRC, Ningde, etc., and terminal car companies have expanded from BMW and Nissan to new forces NIO, Xiaomi, etc., with orders of nearly 8 billion yuan by the end of 2023. In May 2024, the company's new plant will be put into operation, adding 1 billion in production capacity to support high performance growth. Simultaneously plan the expansion of factories in Suzhou and overseas to support long-term performance growth in the automotive electronics business.
Downstream demand for smart terminals is recovering steadily, and the company is fueling long-term growth in AI terminals: 2023 was affected by factors such as the slowdown in demand for iterative product technology from downstream customers, and the company's smart terminal sector performance was under pressure in the short term. In 2024, the company's downstream customer technology iteration was gradually completed. At the same time, demand is recovering steadily. At the same time, the company's smart terminal business is gradually being laid out into new product lines in the field of satellite launch and Wi-Fi, and the iterative effect is obvious. With the rapid development of AI and other technologies, smart terminals are facing new industry opportunities, and the smart terminal business is expected to rebound to the bottom and achieve resonance and improvement with the industry.
Profit forecast and investment rating: We maintain the company's net profit forecast for 2024-2026 at 0.37/0.5/0.68 billion yuan respectively, corresponding EPS of 1.25/1.69/2.28 yuan, corresponding to 24-26 PE of 18/13/10 times, respectively, maintaining the company's “buy” rating.
Risk warning: downstream demand falls short of expectations; risk of exchange rate fluctuations; risk of commodity price fluctuations