Core views
The company achieved revenue of 2.396 billion yuan, a year-on-year increase of 11.38%, achieved net profit of 0.305 billion yuan, a year-on-year increase of 54.49%, achieved net profit of 0.298 billion yuan, a year-on-year increase of 54.97%, 24H1 comprehensive gross margin of 22.76%, an increase of 5.15 pcts year-on-year, and exceeded expectations on both revenue and net profit sides. Revenue growth is mainly due to the company actively developing business in the context of a recovery in industry demand, keeping up with market demand, adopting domestic and foreign two-wheel drive strategies.
The improvement in gross margin stemmed from the company promoting the development of emerging businesses such as new energy vehicles, data centers, and wind and solar storage, to achieve continuous optimization of the product structure.
occurrences
The company released its 2024 mid-year report. Net profit was at 24H1 above the median of the performance forecast guidelines, achieving revenue of 2.396 billion, achieving a year-on-year increase of 0.305 billion yuan, a year-on-year increase of 54.49%, achieving net profit deducted from non-return to mother of 0.298 billion, an increase of 54.97% year-on-year. Net profit to mother and net profit after deducting non-net profit were above the median value of the semi-annual report's performance guide range. 24H1's consolidated gross margin was 22.76%, up 5.15pcts year-on-year.
24Q2 achieved revenue of 1.302 billion in a single quarter, up 14.65% year on year and 19.09% month on month. Net profit to mother was 19.4 billion yuan, up 60.54% year on year, up 78.78% month on month, and realized net profit without return to mother 0.19 billion, up 60.69% year on year and 74.97% month on month. The gross margin for the single quarter was 24.67%, up 833 pcts year on year and 4.19 pcts month on month.
Brief review
Market beta resonated with the company Alpha. Revenue and profit exceeded expectations. According to the 24-year semi-annual announcement, the company achieved revenue of 2.396 billion, a year-on-year increase of 11.38%, achieved net profit due to mother 0.305 billion, a year-on-year increase of 54.49%, and realized net profit without return to mother of 0.298 billion, an increase of 54.97% year on year. The 24H1 comprehensive gross margin was 22.76%, an increase of 5.15 pcts year on year. The revenue and net profit sides all exceeded expectations.
Looking at the revenue side, 2024H1, in the context of the overall recovery of the electronics industry, the company closely followed market demand, adopted domestic and foreign two-wheel drive strategies, and actively developed business. In overseas markets, on the one hand, the company explores existing customer needs, and continues to develop new customers, such as products from Amazon (Amazon) and Samsung (Samsung) customers that obtained certification in the early stages; in foreign markets, the company actively introduces domestic automotive terminal customers, among which customers such as Geely Krypton, Chery Zhixing, and Ideal Smart Driving have been targeted for intelligent driving projects and entered mass production and supply. With the batch introduction of orders from new and old customers at home and abroad, the production capacity of the company's convertible bond raising projects was accelerated, and the company's overall capacity utilization rate continued to rise, driving the company's performance growth. On the profitability side, the company continues to promote the development of emerging businesses such as new energy vehicles, data centers, and wind and solar storage to achieve continuous optimization of the product structure, thereby increasing gross margin and improving profitability. Furthermore, the decline in the exchange rate of the RMB against the US dollar has also had a positive impact on exchange earnings.
The steady development of automotive electronics is accelerating the deployment of optical storage+artificial intelligence. The company has been deeply involved in the field of automotive electronics for many years. The automotive application market is currently the company's largest sales business segment. 24H1, the company made full use of the experience and resources accumulated in the automotive PCB field to actively explore the NEV market, further increasing the share of automotive PCBs. As the main PCB supplier for T customers, the company provides them with key component products covering the electric vehicle tri-electric field, and has also entered the T customer supply chain for new products such as photovoltaics and energy storage based on the same technology development. Looking forward to the future, in the automotive business, the company will continue to introduce new models and products; in other new energy businesses, such as photovoltaics, energy storage, smart grids, and energy walls, the company will continue to release products.
In the field of artificial intelligence, the company has been developing high-multi-layer and high-density interconnect (HDI) hard board technology many years ago. Up to now, the company has achieved mass production capacity for 28-layer AI server circuit boards, 5-stage HDI (including any layer interconnection), 6oz thick copper multi-layer boards, multi-layer soft boards, and multi-layer HDI soft and hard combination boards, which have basically covered the process requirements of PCBs required for mainstream AI servers. Judging from the progress, the company's early self-developed supercomputer system project in cooperation with customers has been officially mass-produced. The company has become the customer's main PCB supplier, and 24H1 can accelerate the rise in demand. In addition, the company is also actively introducing other AI server leading customers, and the company is expected to benefit from the AI wave in the future.
Profit forecasting and investment advice
We expect the company's revenue in 2025/2025/2026 to be 5.409, 6.265, and 7.143 billion yuan, respectively, with year-on-year growth rates of 19.69%, 15.83%, and 14.02% respectively, and net profit to mother of 0.661, 0.868, and 1.016 billion yuan respectively. The year-on-year growth rates are 33.37%, 31.39%, and 16.98%, respectively. The P/E corresponding to the current stock price is 18.81/14.31/12.23 X, respectively, giving a “buy” rating .
Risk analysis
1. Market risk. In recent years, global PCB production capacity has continued to move eastward. The country has become the largest producer of printed circuit boards in the world, and Southeast Asia has become the fastest growing region. In recent years, PCB companies' production capacity has continued to expand rapidly. If the industry experiences overcapacity and increased competition in the industry in the future, product prices will decline. If the company fails to continuously improve the company's technical level, production management, and product quality to cope with market competition, there is a risk that profits will decline.
2. geopolitical risk. In recent years, international and regional conflicts have continued, geopolitical risks have intensified, and uncertainty in the international economic environment has increased. The company's current business is mainly based on exports. If geopolitical risks continue to increase, it may have an impact on the global economy and affect the company's business development. On the other hand, it may also affect the procurement decisions of foreign customers, making it more difficult for the company to enter.
3. Exchange rate risk. The company's consolidated statements are reported in RMB. The risk of exchange rate fluctuations mainly comes from foreign currency exposure due to export sales and import purchases settled in non-RMB. Exchange rate fluctuations may have a certain impact on the company's operating results. During the reporting period, the company's export sales were mainly settled in US dollars, and the exchange rate of RMB against the US dollar fluctuated greatly, which may have a certain impact on the company's operating data.