Event: The company released the 2024H1 performance forecast. With 2024H1, the company expects to achieve net profit of 0.23-0.27 billion yuan, net profit not attributable to mother of 0.22-0.26 billion yuan, all of which turned a year-on-year loss into a profit.
The performance exceeded expectations, benefiting from the volume of downstream customers. According to the performance forecast, we estimate that the company's net profit for 2024Q2 was 0.13-0.17 billion yuan, turning a year-on-year loss into a profit, with a year-on-year increase of 28%-67%. On the revenue side, we expect to benefit mainly from NEV customer orders. Q2 Domestic NEV retail sales volume of 2.35 million vehicles, +32% month-on-month, with sales volume of 0.095 million units, +11% month-on-month; Tesla delivered 0.44 million vehicles globally, +14% month-on-month; ideal sales volume of 0.1 million vehicles, +13% month-on-month. On the profit side, the company continues to promote automated production+continuous expansion of new energy customer projects. The scale effect dilutes expenses such as depreciation, sales, and management, and greatly increases profitability.
Self-developed high-voltage connectors to create new performance growth points. With the rapid increase in NEV market share, driving the demand for electrification, intelligence, and connectivity, high-voltage connectors have become a new incremental market. The company focused on core technical capabilities, realized product development for 40A to 600A high-voltage connectors, charging sockets, and customized high-voltage components. It can provide a complete solution for vehicle high voltage connector selection and design, and has reached mass production and delivery capabilities. At present, high-voltage connector products have been installed in automotive customers such as L Motors, Cyrus, and SAIC Motor. In the future, the company will further optimize the connector product structure, increase market share, and form new performance growth points.
The electrification+intelligent capacity expansion market has great potential for the development of leading wiring harnesses. New energy vehicles require high-voltage wiring, autonomous driving strengthens the demand for high-speed wiring, and the usage and value of vehicle wiring harnesses have increased significantly. The company has a comprehensive layout of high and low voltage wiring products and sufficient production capacity reserves, which is expected to fully benefit from industry expansion and domestic substitution trends. The company's lightweight products have been mass-produced, and integrated high-frequency communication and high-voltage plug-in products have entered the testing stage, helping the company continue to expand new categories and new orders. In 2023, the company successively obtained new targets such as Zhiji, L Auto W series models, NIO, Mercedes-Benz, and SAIC Volkswagen. There are plenty of ongoing projects, and future growth can be expected.
Profit prediction and valuation: Considering the volume of orders from downstream customers and the company's development of high-voltage connector products, we raised the company's net profit to mother in 2024-2026 to 0.51/0.71/0.84 billion yuan, corresponding to PE 24/17/14 times, respectively, maintaining the “buy” rating.
Risk warning: Due to the macroeconomic downturn, industry demand is weak, raw material prices fluctuate, Chongqing factory volumes fall short of expectations, and market development falls short of expectations.