Deeply cultivate the field of connectors and expand metal heat sinks horizontally. The company was founded in 2003 and has formed a product system with connectors as the main component, and is used in consumer electronics fields such as mobile phones, smart wearable devices, and computers. In 2023, the company achieved revenue of 0.721 billion yuan, YoY +21.34%. In 2024, the company will expand the field of semiconductor metal heat sinks and automotive connectors, which is expected to open up a second growth curve.

Metal heatsinks: Increased chip power consumption is compounded by domestic manufacturers' self-development trends, and there is plenty of room for future growth. As chip performance improves, the heat generation density of electronic components is getting higher and higher, which places higher demands on heat dissipation technology. Metal heat sinks are suitable for FC packages and can be attached directly to the chip surface to improve heat dissipation efficiency. In the past, the market was monopolized by foreign manufacturers, and domestic manufacturers accelerated breakthroughs under the trend of self-development of chips. The company has a complete manufacturing system including mold development, stamping, electroplating, injection molding, and assembly. As of the first half of 2024, sample delivery to many important end customers has been completed, supplier codes for individual core customers have been obtained, and small-batch shipments have begun. It is expected that official batch supply to individual core customers will be achieved in the second half of this year, becoming a new growth point for the company.

Connectors: Widely used downstream, the company's new products are expected to be released. The connector market is growing steadily, and downstream applications are widely used. The competitive landscape is relatively scattered, and foreign manufacturers dominate. The company is deeply involved in the consumer electronics market and has stable cooperation with end customers. In the automotive sector, the company has developed products such as Fakra high speed connectors, Mini Fakra high speed connectors, high speed HSD connectors, and high voltage connectors. In the consumer electronics sector, 2024H1's board-to-board connectors have been shipped in batches to its core customer Communication Holdings, which is expected to continue to lead to increased performance.

MIM mechanical parts: The company has mastered the core process and is linked to stable cooperation with major customers. The MIM market has continued to expand in recent years, and is expected to grow to 14.14 billion yuan in 2026, with a compound annual growth rate of 11.6%. In the past, the company's customers were mainly “Little Genius” watches, and it is expected to expand new customers in the future.

Investment advice: We expect the company to achieve net profit of 0.058/0.147/0.235 billion in 2024-2026, an increase of 88.5%/151.9%/59.9% year-on-year. In terms of selecting comparable companies, we chose Lixun Precision, Ricoda, and data center liquid cooling manufacturer Invec in the connector industry as comparable companies and gave a target PE valuation of 45 times for 2024, corresponding to a total market value of 6.6 billion yuan and a stock price of 31.96 yuan. Give it a “buy” rating.

Risk warning: The consumer electronics boom cycle is weakening; new business expansion falls short of expectations.