24H1's revenue and net profit to mother were 5.62 billion yuan and 180 million yuan, respectively, up 67% and -16% year-on-year, respectively.
The automotive electronics business has obvious advantages, and the industrial chain is complete: Changxin has completed the “vehicle sensor+touch panel + integrated touch display module” industry chain layout, and also provides module packaging services such as instrument panel modules, rearview mirror modules and central control screen modules, B-pillar, head-up display, front and front passenger display screens, armrest screens, etc., and is further developing large-size full-fit products. It concentrates instruments, central control, entertainment, and driving screens on a large screen, providing full-fit product solutions for 27-44.8 inch vehicle displays. The company has strong thermoforming technology and can process flat glass into curved glass in different shapes such as V, C, S, L, U, W, etc., to help the car cockpit have a better integrated display effect. The company has advantages in optical film technology. It is expanding HUD head-up display related products. It has mastered automotive HUD curved mirror technology and completed related project connections, simultaneously explores foreign customers, and is planning a HUD mass production workshop. Automotive electronics customers include Japanese, European, American and German brand car dealers, covering more than 70% of the world's vehicle brands.
Consumer electronics thinning, UTG and modules are highly competitive: The scale of the thinning business ranks first in the country, serves the most high-end international and domestic customer groups, and is Company A's only certified thinning supplier in mainland China. Changxin has developed new forms of unequal thick foldable glass UFG, ultra-thin glass laminated cover, ultra-thin glass coated cover and SUS glass liner to consolidate the company's integrated supply capacity in the foldable field. The products cover 2-20 inch sizes and 30-100 μm plate thickness to meet applications such as wearable and folding laptops. Changxin has built and completed a 200K monthly production capacity UFG production line, which is in the stage of equipment commissioning and yield improvement. The subsidiary Dongxin Optoelectronics has been designated for major domestic leading brand customer projects. It has in-depth cooperation with Vivo, OPPO, ZTE, Google and other mainstream international and domestic mobile phone customers, and will provide customers with over one million UTG products this year. The company's VR display module business had an early layout. It is providing Quest3 VR headset module products for VR flagship customers in North America, and developing VR headset modules equipped with microLEDs. The company supplies the top five international smart wearable terminal customers, etc., exclusively for the Little Genius Z series, Huawei GT series, and Xiaomi flagship watches, and provided OPPO with the first wearable watch, etc., successfully mastered the core technology of flexible OLED module packaging, and has shipped various flexible OLED wearable display modules in batches to North American consumer electronics giants. The company is also actively expanding its laptop, tablet and mobile phone module business.
We forecast that the company's earnings per share for 24-26 will be 0.23/0.37/0.52 yuan respectively (the original 24-25 forecast was 0.31/0.38 yuan, and the gross profit margin of the main business was adjusted mainly due to the market environment). Based on the 24-year average PE valuation of comparable companies, we gave a target price of RMB 6.44 yuan to maintain the “buy” rating.
Risk warning
UTG's business progress falls short of expectations; price pressure on the automotive industry; industry competition intensifies; downstream demand falls short of expectations.