Incident: On July 5, 2024, the controlling shareholder of Shiyun Circuit signed a share transfer agreement with Shunkong Group, agreeing that Xinhao International agreed to transfer 170,546,596 shares of Shiyun Circuit to Shunkong Group at a price of 20.20 yuan/share, accounting for 25.90% of Shiyun Circuit's total share capital. After the transfer, Shunkong Group and its co-actors (the actual controller is the Shunde District State-owned Assets Administration Bureau) will hold a total of 29.19% of the shares in World Transport Circuit.
The results for the second quarter were impressive: benefiting from the recovery in the downstream market and sufficient orders, and the acceleration in the release of production capacity in convertible bond raising projects, the overall capacity utilization rate increased, which led to an increase in performance. Combined with factors such as product structure upgrades, increased gross margin and exchange earnings, the company's second-quarter results were impressive. According to calculations, the company expects to achieve net profit of 0.166-0.206 billion yuan in 2024Q2, +37.61% -70.69% year-on-year, and +53.25-90.08% month-on-month.
Core suppliers are expected to continue to benefit. Looking ahead, under the influence of active sales, Tesla produced a total of about 0.411 million electric vehicles and delivered about 0.444 million electric vehicles worldwide in 2024 Q2. With FSD entering China, the launch of next-generation models, the release of pickups, and intelligent upgrades, Tesla is expected to return to the growth cycle. In addition, the installed capacity of Tesla's energy storage products reached 9.4 GWh in 2024Q2, and the energy storage plant in California and the Shanghai energy storage plant were put into operation one after another to help Tesla's energy storage business grow over the long term. In addition to the above project products, the company is also participating in projects such as humanoid robots and dojos for major customers, and the company is expected to continue to benefit as a global core supplier to major customers.
Operation according to the original company's strategic plan: Along with changes in actual controllers, the chairman of the company is the director recommended by the transferee Shunkong Group, but the original actual controller, She Yingjie, will continue to serve as vice chairman and general manager, responsible for the company's daily business matters to ensure that domestic and foreign production capacity investment, business development, and domestic and foreign customers are not affected. Shunde has a local corporate group composed of leading manufacturing companies such as Midea Group, Hisense Home Appliances, and Xinbao Co., Ltd., which are closely linked to the PCB business. After the transaction is completed, the company may have the opportunity to establish cooperation with the high-end manufacturing industry in Shunde in the future to promote the expansion of the company's PCB business.
Investment proposal: We expect the company to achieve operating income of 5.434/6.274/7.2 billion yuan and net profit to mother of 0.652/0.757/0.861 billion yuan in 2024-2026. The corresponding PE was 22.31/19.21/16.88 times, respectively, maintaining the “gain” rating.
Risk warning: Risks such as downstream demand falling short of expectations, exchange rate risk, and increased industry competition.