The company announced its 2024 semi-annual report. In the first half of 2024, the company achieved revenue of 1.877 billion yuan, a year-on-year increase of 32.48%, and achieved net profit of 0.027 billion yuan, and the same period last year was -0.015 billion yuan, turning a year-on-year loss into a profit. Looking at a single quarter, the company achieved revenue of 0.968 billion yuan, an increase of 34.02% year-on-year, and achieved a net profit of 0.012 billion yuan, a year-on-year decrease of 10.45%. As a leading company in notebook structural components, on the one hand, the company is expected to benefit from the recovery in the notebook industry's boom stimulated by AI PCs. On the other hand, the company actively promotes the “two wings” layout of communication electronics and new energy vehicles to open up room for growth and maintain the purchase rating.

Key points to support ratings

Benefiting from the recovery of the laptop industry, the company's performance has steadily improved. Entering 2024, the company continues to be guided by the “two wings in one” strategic pattern, and its performance has steadily improved due to the recovery trend of notebook computers and the demand for switching brought about by AIPC's increased penetration rate. In the first half of 2024, the company achieved revenue of 1.877 billion yuan, a year-on-year increase of 32.48%, and achieved net profit of 0.027 billion yuan. In the same period last year, it was -0.015 billion yuan, turning a year-on-year loss into a profit.

Profitability has rebounded, and the future is expected to benefit from the accelerated penetration of AI PCs and continuous improvement. In terms of profitability, the company's overall gross margin for the first half of 2024 was 14.52%, up 1.61 pct year on year, and the net margin was 0.05%, up 2.03 pct year on year. In terms of the period expense ratio, the company's sales/management/R&D/finance expense ratios for the first half of 2024 were 1.38%/4.26%/5.25%/1.18%, respectively, -0.19pct/-2.07pct/+0.15pct/+1.48pct, respectively. The increase in financial expenses was mainly due to the impact of the US dollar exchange rate. Overall, the cost rate remained stable. Since AI PCs place higher demands on notebook structural components, we believe that the company's profitability is expected to continue to increase as the penetration rate of AI PCs gradually increases in the future.

The NEV structural parts business is progressing steadily and is expected to create a second growth curve. The company's business in the field of automotive electronics is progressing steadily. Currently, it has entered the mass production stage. Ongoing orders have continued to grow steadily, and production capacity has been gradually released. The company has obtained certification from many well-known automotive electronics manufacturers and formed business relationships with many NEV manufacturers and their suppliers. The downstream products include Xiaomi, NIO, Xiaopeng, BYD, BMW, Geely, Volkswagen, etc., and the NEV structural parts business is expected to become a new growth point for the company in the future.

Continuously optimize the company's industrial structure and enhance overall competitiveness. In addition to steady progress in the business sector, the company has also continuously optimized the company's industrial structure by increasing capital and investing in Zhejiang Aichuang Technology Service Co., Ltd. and transferring shares in Nanchang Chunqiu Electronic Technology Co., Ltd. According to the company's 2024 mid-year report, the company holds a total of 65% of the shares in Nanchang Chunqiu Electronics, and Nanchang Chunqiu Electronics lost 45.9642 million yuan in the first half of the year. Through the company's drastic industrial upgrading and structural reforms from both internal and external dimensions, it is conducive to concentrating the company's resources, strengthening the company's overall competitiveness, improving the company's profitability, and promoting the healthy development of the company.

valuations

We expect to achieve operating income of 3.965/4.88/5.625 billion yuan in 2024-2026, achieve net profit of 0.157/0.265/0.377 billion yuan, EPS of 0.36/0.60/0.86 yuan, and current stock price corresponding to PE is 24.6/14.5/10.2 times. As a leading company in notebook structural components, the company is expected to benefit from the recovery in notebook industry prosperity stimulated by AI PCs. On the other hand, the company actively promotes communication electronics and new The “two-wing” layout of energy vehicles opens up room for growth and maintains purchase ratings.

The main risks faced by ratings

The risk that downstream demand falls short of expectations; the risk of new business development falling short of expectations; the risk of increased market competition.