1H24's performance grew rapidly, and net profit to mother increased 146% year over year. The company 1H24 achieved revenue of 2.144 billion yuan (YoY +57.11%), achieved net profit of 0.308 billion yuan (YoY +145.77%), achieved operating income of 1.104 billion yuan (YoY +46.51%, QoQ +6.12%), net profit to mother 0.146 billion yuan (YoY +86.48%, QoQ -9.90%), gross profit margin 32.49% (YoY + 1.26pct, QoQ-2.82pct). The main reason for the high increase in the company's revenue is the recovery in consumer electronics demand and the rapid growth of the core customers of automotive connectors. The month-on-month decline in the company's gross margin is mainly due to the automobile industry chain facing price pressure and the price reduction of automotive connectors.
Revenue from the automobile business has nearly doubled, leading the trend of domestic substitution. 1H24, the company's automotive connectors achieved revenue of 0.597 billion yuan (YoY +90.28%) and gross profit margin of 40.78% (YoY +1.35pct). According to data from the China Automobile Association, 1H24 domestic NEV production was 4.929 million vehicles, up 30.1% year on year, and the market penetration rate reached 35.2%. Furthermore, with the intelligent upgrading of automobiles, the number and value of connectors used in bicycles is also showing an upward trend, and the market capacity of high-frequency high-speed connectors for automobiles has further expanded. At present, the company has a complete range of automotive connector products, rich experience in mass production, a wide range of downstream customers. It has entered the supply chain of major domestic automobile manufacturers such as Cyrus, Geely, Great Wall, Changan, and Chery, and has achieved large-scale shipments. The company's automotive connector business is expected to continue to grow rapidly.
Benefiting from the recovery in consumer electronics demand, the company's traditional main business increased year-on-year, and BTB penetration rate increased. 1H24's RF connector and cable component business achieved revenue of 0.496 billion yuan (YoY +40.92%) and gross profit margin of 45.04% (YoY +3.07pct). The company's operating efficiency continued to improve, production costs were strictly controlled, and product gross margin increased compared to the same period last year. By product, RF connectors and electromagnetic compatibility devices are the company's best products. Customers are mainly the top Android manufacturers, fully benefiting from the recovery in domestic and overseas demand in the consumer electronics industry. In terms of board-to-board connectors, the products have been used by core customers in batches. In the future, as 5G millimeter wave frequency segments and folding screen penetration rates increase, high-end products such as LCP and RF BTB connectors in the company's layout will all usher in more market space.
Investment advice: Maintain profit forecasts and maintain a “better than the market” rating.
The market share of the company's high-end products such as BTB connectors in the consumer electronics sector continues to rise, and the automotive connector business has entered a performance release period. We are optimistic about the company's long-term development and maintain profit forecasts. The company's net profit for 24-26 is 0.62/0.815/1.011 billion yuan (YoY +74.0%/+31.5%/+24.2%). The current stock price corresponds to PE 21/16/13x, maintaining a “superior to the market” rating.
Risk warning: Downstream demand falls short of expectations; the increase in company share falls short of expectations.