The world's leading expert in functional components, a trusted core supplier of AI terminal hardware

Established in 2006, Lingyi Technology Co., Ltd. focuses on consumer electronics precision functional devices and continues to cultivate in the industry. The company successfully went public with Jiangfen Magnetic Materials in 2018 and officially changed its name to Linyi Intelligent Manufacturing. The company actively deployed in the field of consumer electronics terminal hardware and completed the transformation from a consumer electronics manufacturer to an AI terminal hardware manufacturing platform. In the field of AI terminal equipment, the company mainly participates in products such as materials, functional parts, structural parts, functional modules and chargers. The downstream includes consumer electronics products such as mobile phones, PCs, wearables, and XR. In the automotive sector, the company's main layout includes battery structural parts and automotive precision structural parts. The main products include battery adapters, power battery aluminum cases, top covers, etc. In the field of photovoltaic energy storage, the company develops micro photovoltaic inverter products through ODM cooperation with international customer Enphase and provides OEM services for them. In addition, the company has the ability to manufacture complete machines for outdoor energy storage power products.

Generative AI promotes consumer electronics hardware upgrades, and the company's multi-field layout is expected to fully benefit from AI end-side upgrades 1: Increased chip computing power brings about an upgrade in cooling demand, and VC hot plates are expected to become mainstream solutions. High-performance AI chips generate a large amount of heat during operation, and rising semiconductor component temperatures will affect the reliability and stability of electronic product systems. In order to dissipate heat better, manufacturers are gradually adopting VC heat distribution panels with better heat dissipation efficiency as cooling solutions for AI mobile phones and PCs, and are upgrading in the direction of ultra-thinness, simplified structure, and cost reduction.

AI end-side upgrade 2: Charging power upgrade to meet the battery life requirements of AI phones. As the performance of AI mobile phone chips improves, AI phones will consume more electricity. In the future, AI phones will improve smartphone battery life by improving charging efficiency. Referring to Counterpoint's data, the charging power of mainstream global smartphone brands has increased markedly in the past five years.

AI end-side upgrade 3: Energy density increases, and steel-shell batteries are expected to gradually become popular. In response to the requirements of the European Detachable Battery Act, which requires that from 2027, all portable batteries must use a detachable battery design. Apple currently uses the steel-case battery route to meet the requirements of the Act; on the other hand, energy density and battery heat dissipation are improved through steel case battery technology upgrades.

Deeply bind major new energy and photovoltaic customers to create a second growth curve. The company acquired 95% of Zhejiang Jintai Electronics shares in 2021 and entered the NEV sector. With the company's precision manufacturing capabilities and business development capabilities, the company has developed rapidly in this field and entered the supply chain of major new energy customers in North America. The subsidiary Xercon is deeply tied to Enphase. The subsidiary Xercon is an important foundry for Enphase. Xercon established an internal photovoltaic development project in October 2019, and began supplying microinverters and other components to Enphase in the North American, European and Asia-Pacific markets in 2020.

Profit forecasts and investment advice

As a global AI terminal hardware leader, the company has continued to cultivate major international customers and participate in many customer product lines. In addition, the company has also continued to expand downstream of the industrial chain and has comprehensive capabilities in parts, modules and complete machines. Along with the wave of AI terminal innovation led by major international customers, the future smart terminal hardware will revolve around AI phones to begin a time dimension upgrade for more than 3 years. The company's consumer electronics business will fully benefit from the upgrading trends of heat dissipation, steel case batteries, and fast charging, and it is expected that it will continue to enjoy the dividends of the rapid development of the industry in the future. We are optimistic about the company's medium- to long-term growth and certainty. We expect the company's net profit to be 1.931, 3.226, and 4.02 billion yuan respectively in 2024-2026, giving the company a “buy” rating.

Risk warning

1. Consumer electronics demand falls short of expectations; 2. Customer cooperation falls short of expectations; 3. Risk of worsening industry competition; 4. Risk that profit forecasting assumptions are untrue or fall short of expectations.