Incident: The company released the 24H1 performance forecast. 24H1 is expected to achieve net profit of 0.117-0.139 billion yuan, +56.00%-85.00% year-on-year; after deducting non-net profit of 0.109-0.131 billion yuan, +50.84%-80.93% year-on-year.
Looking at a single quarter, 24Q2 achieved net profit of 0.052-0.074 billion yuan, +25.26%-77.66% year-on-year.
The performance was in line with expectations. The increase in the company's performance was mainly due to: 1) Revenue growth: Benefiting from the end of the customer inventory adjustment cycle and the company's business team's active efforts to obtain orders, the company's ODM and OBM MicroTouch brand business increased compared to the same period last year. At the same time, the holding subsidiary Hongtong Technology's next-generation products began mass production in 2024, and revenue also increased significantly over the same period last year. 2) Product structure optimization: By actively optimizing product costs and combinations, the gross margin of the company's ODM and OBM MicroTouch brand products remains at a relatively high level. As a result, in the case of a significant increase in operating income, gross profit increased at the same time. 3) Expense control and inventory optimization: The company continues to improve operational efficiency and improve cost control capabilities. In addition, 23H1 actively controls and disposes of idle inventory. As a result, the impact of 24H1 inventory price reduction preparations on the company's net profit decreased compared to the same period last year.
Strong overseas demand combined with Hongtong Technology helped accelerate the development of the company's performance. 1) ODM: Actively introduce new customers and increase market share. In addition to developing small and medium-sized customers in 2023, the company successfully secured new global customer targets, and mass production is expected to begin in 24Q4 or 25. 2) MicroTouch: Increase sales channels for independent brands. Through distribution channels, the MicroTouch brand has been successfully applied in various fields such as retail, industrial control, logistics, and kitchen display (Kitchen Display), and is expected to achieve steady growth in the future. 3) Hongtong Technology: The company acquired 60% of Hongtong's shares in September 23, holding a total of 70% of Hongtong's shares. 24Q1 Hongtong Technology officially merged, and the company's business was successfully extended to the field of automotive smart cockpits. With the expansion of Hongtong's automotive projects, the company's performance is expected to accelerate.
Profit forecast: Considering Hongtong's consolidated performance, the net profit for 24-26 is estimated to be 0.345, 0.36, and 0.539 billion yuan. Based on the valuation of comparable **** companies, it is expected to generate investment income of about 0.07 billion yuan in 24 (2.2% exit of ITH shares). Maintain a “buy” rating.
Risk warning: Downstream demand recovery falls short of expectations; new business expansion falls short of expectations; raw material prices fluctuate.