The 2024 semi-annual report predicts that the performance has exceeded expectations. We are optimistic about the high growth of the automotive connector business and maintain the purchase rating
The company released a semi-annual performance forecast. The 2024H1 net profit is expected to be 3.00 to 0.335 billion yuan, YOY +139.72% to 167.69%; net profit after deducting non-return to mother is 2.86 to 0.321 billion yuan, and YOY +144.08% to 173.95%. Looking at a single quarter, 2024Q2's net profit to mother was 1.38~0.173 billion yuan, YOY +77% ~ +122%, QoQ -15% ~ +7%; net profit without return to mother was 1.35~0.17 billion yuan, YOY +82% ~ 130%, and QoQ -11% ~ +13%. The company's 2024H1 performance continued to grow, mainly due to the recovery of the 2024H1 global consumer electronics industry and the introduction of new customers in the company's automotive high-frequency high-speed connector business, and continued prosperity. Considering that the automotive electronics business continues to grow at a high rate, we raised our 2024/2025/2026 net profit forecast to 0.62/0.82/1.05 billion yuan (previous value was 0.62/0.8/1.03 billion yuan). The current stock price corresponds to PE 25.4/19.3/15.1 times. We are optimistic about the company's long-term development and maintain a “buy” rating.
2024Q2 automotive connector shipments grew rapidly in a single quarter, and the profitability of the consumer electronics business continued to recover in 2024Q2, automotive connector shipments continued to grow rapidly in the single quarter. The downstream customer coverage was wide, and it has entered the supply chain of major domestic automobile manufacturers such as Geely, Great Wall, BYD, Changan, Chery, and Ideal. The company has a complete range of high-frequency high-speed automotive connector products. As the level of domestic autonomous driving continues to advance and the domestic replacement rate increases, the automobile business is expected to continue to grow at a high rate. On the consumer electronics side, as demand from terminal consumer electronics manufacturers gradually recovers and the profitability of the soft board business continues to increase, the profit situation of the consumer electronics business has clearly recovered.
The scale advantage of precision manufacturing process platforms is gradually showing. As the company's business scale continues to expand, the advantages of precision manufacturing process platformization for major products are gradually showing, and automation efficiency continues to improve. At the same time, the company's operating efficiency continues to improve, production cost control is strong, and future profitability is expected to improve quarterly. In terms of product strategy, the company has stabilized its position in the mobile consumer electronics market while increasing its expansion efforts to major overseas customers in the non-mobile consumer electronics industry. On the other hand, the company is seizing development opportunities in the automotive connector industry, upgrading R&D and platform manufacturing capabilities for high-frequency high-speed automotive connectors, and is optimistic about the company's long-term development.
Risk warning: the risk of a car price war, car sales falling short of expectations, consumer electronics demand falling short of expectations.