Incident Overview

On August 27, the company released the 2024 semi-annual report. In 2024H1, the company achieved operating income of 0.646 billion yuan, yoy +26.28%; realized net profit of 0.044 billion yuan, yoy +81.86%; realized net profit of 0.039 billion yuan without return to mother, yoy +166.63%. 2024H1 consolidated gross margin was 26.38%.

Analysis and judgment

Driven by new high-end products, backlight module revenue is expected to continue to improve. The company has been deeply involved in the field of light guide structural components for many years and has formed a stable and efficient business model. In recent years, the company has also continuously expanded the application fields of optical microstructured light guide components to create a new growth point. 2024H1, the trend of global laptop decline due to slowing demand and inventory adjustments has been mitigated, and inventory revisions and weak demand have become normal. However, due to widespread price cuts in terminal products and the impact of the consumption cycle, laptop backlight modules achieved revenue of 0.147 billion yuan, a slight decrease over the previous year. Looking ahead, we believe that demand for laptop backlight module products is expected to continue to improve as products become ultra-thin, automatic equipment transformation costs are reduced, miniLED/RGB laptop keyboard backlights are promoted, and the gradual introduction of AIPC flagship products by leading brands to drive new demand.

Furthermore, based on MiniLED backlight technology, the company is simultaneously developing automotive products such as integrated components, atmosphere lights, and indicators combined with buttons for intelligent cockpit interaction systems, and is expected to create a new growth curve in the future.

The recovery in terminal demand was compounded by business collaboration, and the revenue of signal transmission components and component products grew rapidly. The signal transmission components and components business covers the company's original precision key switches and subsidiary Xinweixing's precision connectors, hardware shields and other products. Benefiting from the recovery in smartphone demand and the efficient synergy and complementary advantages of the two businesses after the company's acquisition of Xinweixing, the company's product shipments grew steadily. The 2024H1 signal transmission components and components business achieved sales revenue of 0.291 billion yuan, yoy +52.12%. Currently, with generative AI functions gradually penetrating into consumer electronics application terminals, major mobile phone manufacturers are also gradually updating high-end models, and at the same time increasing shipments of multi-brand folding screen smartphones. We believe that the smartphone switching cycle may arrive, which is expected to simultaneously drive the shipment of the company's precision key switch and connector products.

The normalization of the delivery of new energy structural components has helped create a second growth curve in the long term. 2024H1, the company achieved revenue of 0.013 billion yuan on the new energy structural component business side. The CCS module has completed the construction of four automated mass production lines, the delivery of customer orders in the field of industrial energy storage has been normalized, and the company is also simultaneously expanding NEV customers. The company continues to promote technological upgrading, optimize production and processing capabilities, continuously improve its production efficiency and intelligent manufacturing level, and strive to create a second growth curve in the new energy sector for a long time.

Investment advice

Maintain a “buy” rating. We adjusted the company's 2024-2026 net profit forecast to 0.118/0.162/0.217 billion yuan. The year-on-year growth rates were +25.58%/+37.33%/+34.10%, respectively. The corresponding EPS was 0.68/0.93/1.25 yuan, respectively, and the corresponding PE valuation was 28/21/15 times, respectively.

Risk warning

Terminal demand falls short of expectations, industry competition intensifies, project construction falls short of expectations