The company's business scope is the production and sale of aluminum electrolytic capacitors and aluminum foil. The products mainly include solder pin type, solder plate type, bolt type, lead type and vertical chip type liquid aluminum electrolytic capacitors, lead type, vertical chip type and laminated chip solid aluminum electrolytic capacitors, which are widely used in new energy vehicles, photovoltaics, energy storage, wind power, industrial automation, intelligent robots, 5G communication, AI data processing centers, power supplies, lighting, smart grids, etc.

Continuing to increase brand coverage, 1Q24's revenue improved year-on-year. 1Q24 achieved revenue of 0.81 billion yuan, a year-on-year increase of 15.27%. The company actively interacts with automotive customers, becoming the only domestic company that has passed the automotive ASA certification, and at the same time gained the trust of leading industrial customers. According to the company's announcement, in 2023, the company's industrial control/new energy sector accounted for 47.11% of the main business revenue, and achieved 95% brand coverage in the new energy market. The automotive OBC and industrial control markets also achieved 90% and 92% brand coverage respectively.

Market strategies have been continuously adjusted, and production capacity has been effectively increased. In order to better cope with industry competition, the company adjusted product prices, so gross margin was under pressure. As of 2023, the company's production capacity of aluminum electrolytic capacitors exceeded 19 billion, production increased 19.60% year on year, sales increased 9.32% year on year, and sales revenue of industrial control/new energy capacitors increased 8.27% year on year.

Added profit forecasting to maintain a “buy” rating. We are optimistic that the company will actively expand into the field of industrial control aluminum electrolytic capacitors, but considering industry competition, rising raw material prices, and the company's market strategy, we lowered our 24-year net profit forecast to 0.34 billion yuan (original value 0.8 billion yuan), and added a net profit forecast of 0.37/0.42 billion yuan for 25-26 years. The current market value corresponds to only 15 times PE in 24 years, and the valuation cost ratio is outstanding (the valuation center for the past 3 years is 23x), maintaining a “buy” rating.

Risk warning: risk of fluctuations in electricity prices and aluminum foil prices; fluctuating consumer electronics demand; progress in developing new markets falls short of expectations