Incident: The company released a semi-annual performance forecast for 2024. It is estimated that 24H1 will achieve net profit of 0.23-0.27 billion yuan, +660.7~ 758.2% year over year, of which Q2 is 0.13-0.17 billion yuan, +28.2~ 67.9% month-on-month (23Q2 is -0.016 billion yuan), exceeding market expectations; net profit not attributable to mother after deducting 0.22-0.26 billion yuan, +572.5-658.4% year on year, of which Q2 is 0.125-0.165 billion yuan (-0.019 billion yuan in 23Q2), +31.2-73.2% month-on-month.
Sales of major customers increased, and performance continued to improve month-on-month: The main reasons for the change in performance in the current period include: (1) Significant increase in customer orders: The rapid development of new energy vehicles has led to an increase in the market size of the automotive wiring harness industry. With competitive advantages such as high standards, strict requirements, and long-term support for high-quality customers, the company actively expanded new customers and obtained continuous and stable orders. The company's mass production project volume and mass production of new projects promoted rapid revenue growth. The sales volume of 24H1's major customers all achieved significant growth, with Cyrus +637% YoY, which is ideal +34%. (2) The cost rate decreased during the period: on the one hand, the company continued to promote intelligent manufacturing and digital transformation to reduce costs and increase efficiency; on the other hand, benefiting from the continuous expansion of new energy customer projects, the increase in sales volume made the company's scale effect more remarkable. The company's depreciation/amortization and sales, management, R&D, and financial expenses have been drastically reduced, and profitability has increased dramatically.
The share of new energy high-voltage wiring harnesses has increased, and product sales have continued to grow: Based on an intelligent manufacturing production management system, the company has created a set of high-standard, high-efficiency, and highly replicable fully automated high-voltage wiring harness production lines. The company's automated high-voltage wiring harness production lines have been successively applied to high-voltage projects such as L cars, American T Company, Volkswagen, SAIC, Cyrus, and NIO, etc., to continuously develop new customers. In '23, the company achieved rapid growth in sales of all types of wiring harnesses. Among them, sales of complete wiring harnesses were 1.8426 million pieces, +25.4% year over year, 6781 million engine harness sales, +51.6% year over year, and sales of other wiring harnesses were 21.2613 million pieces, +2.1% year over year.
The scale of the industry is growing, and the market share is expected to increase: Compared with traditional fuel vehicles, new energy vehicles need to use high-voltage wiring harnesses to connect various circuit units, driving the value of NEV wiring harnesses to reach more than 5,000 yuan, which is significantly higher than 3,000 yuan for fuel vehicles. Improved autonomous driving functions place new requirements on high-speed transmission data lines, and the scale of the industry continues to grow. As international automobile manufacturers pay more attention to cost control and local procurement of auto parts is increasing, the company is expected to expand in scale and replace domestic production.
Profit forecasting and investment advice. The company's 2024-2026 EPS is expected to be 1.35/1.81/2.2 yuan respectively, corresponding PE is 20/15/12 times, and net profit CAGR to mother is 161%, maintaining a “buy” rating.
Risk warning: competition increases risk; risk of customer development falling short of expectations; risk of rising raw material prices, etc.