Incidents:
On July 18, 2024, the company released the 2024 semi-annual report performance forecast. The net profit range attributable to shareholders of listed companies was 0.3 billion yuan to 0.335 billion yuan, an increase of 139.72% to 167.69% over the same period of the previous year; the net profit range after deducting non-recurring profit and loss was 0.286 billion yuan to 0.321 billion yuan, an increase of 144.08% to 173.95% over the same period last year.
Comment:
Benefiting from the consumer electronics recovery, revenue increased significantly year over year. According to the 2024Q2 global smartphone shipment data released by IDC, 2024Q2 global smartphone shipments were 0.2854 billion units, up 6.5% from last year; global smartphone shipments in Q1 2024 were 0.2894 billion units, up 7.8% from last year. 2024H1 global smartphone shipments were 0.5748 billion units, up 7.14% from last year. The company is an advanced supplier of products related to miniature RF electrical connectors and interconnection systems in China. It mainly provides products related to electromagnetic compatibility devices, mobile phone RF connectors, and BTB connectors. It has now entered the supply chain of mainstream global smartphone brands and has become a core supplier for world-renowned smartphone companies such as Xiaomi, Opal, Backgammon, Samsung, Honor, ZTE, and Huawei. Benefiting from the recovery in downstream mobile phone shipments, performance improved markedly in the first half of the year.
The customer structure of automotive connector products continues to improve, and core customer revenue is growing rapidly. According to the sales data of Chenglian Auto, the sales volume of 24H1 vehicles in China was 14.047 million units, up 6.1% year on year. Among them, the sales growth rate of new energy vehicles was significantly higher than that of traditional fuel vehicles, and the sales volume of 24H1 new energy vehicles was 4.944 million units, up 32% year on year, with a market share of 35.2%. The automotive connector fakra, mini-fakra and ethernet connector products provided by the company continue to benefit from the level of automotive electronics and the acceleration of the intelligent process, and have become indispensable automotive components. Downstream customers are mainly major domestic automobile manufacturers such as Geely, Great Wall, BYD, Changan, Chery, and Ideal. With the advancement of automobile intelligence and autonomous driving, the company's automotive connector revenue continues to grow rapidly, and the product customer structure is constantly being optimized.
The advantages of platforming precision manufacturing processes are gradually showing, and automation efficiency continues to improve. The company has a complete manufacturing chain, including mold development and production, automated R&D, design, production and large-scale product production integration capabilities. The company has precision machining capabilities of less than 2um, and the accuracy of all important parts is at um level. As the scale of operations continues to expand and operational efficiency continues to improve, product gross margin increased compared to the same period last year.
Investment advice: Give a “buy” rating. I am optimistic that the company will continue to benefit from the recovery of consumer electronics and the investment opportunities brought by the continued expansion of automotive connector products from major customers. The company is expected to achieve revenue of 4.429/5.878/7.3 billion yuan in 2024-2026, and net profit to mother of 0.663/0.859/1.107 billion yuan, respectively, and corresponding PE of 23.90/18.43/14.30 times, respectively.
Risk warning: The competitive landscape of the automotive connector industry intensifies; the recovery of consumer electronics falls short of expectations