Report summary

Customer product structure adjustments put pressure on second-quarter results

In the first half of 2024, the company achieved revenue of 0.412 billion yuan (year-on-year growth rate of 10.22%) and net profit of 0.078 billion yuan (year-on-year growth rate of 14.53%): Among them, in the 2024Q2 single quarter, the company achieved revenue of 0.191 billion yuan (year-on-year growth rate -2.00%, month-on-month growth rate -13.33%), and net profit of 0.025 billion yuan (year-on-year growth rate of 38.92%, month-on-month growth rate of -53.42%). 2. The main reason for Li Du's performance is the adjustment of customer product structure, which has led to a decline in demand for some products

Domestic mobile phones are growing at a high rate, and the company can be expected to grow

In August 2024, domestic brand mobile phones shipped 22.178 million units, an increase of 31.7% over the previous year. From January to August 2024, domestic brand mobile phone shipments reached 0.168 billion units, an increase of 21.3% over the previous year. Furthermore, domestic operating system phones surpassed Apple's market share for the first time. According to Counterpoint data, Huawei's HarmonyOS (HarmonyOS) surpassed Apple iOS for the first time in the first quarter of 2024, becoming the second-largest mobile operating system in China. Lixin Micro's dependence on its largest customer continued to decline, from 40.24% in 2022 to 32.87% in 2023, indicating that the company has achieved good results in customer development. The strong increase in domestic brand mobile phone shipments, combined with the expansion of the company's customer channels, is expected to bring more business opportunities to the company.

Investment advice

The second half of the year is the traditional peak season for the consumer electronics industry. Mobile phone manufacturers will continue to release new devices, which is expected to drive the industry's performance center upward. The company has launched a variety of products with advanced international performance indicators. The product line has been supplemented and improved to a certain extent, and sales have begun to form on a certain scale. The company will also continue to invest in R&D and technical strength in signal chain products, optimize product structures, and gradually achieve self-standards to provide customers with complete solutions. The company is expected to achieve net profit of 0.267 billion yuan, 0.317 billion yuan, and 0.36 billion yuan in 2024-2026, respectively. The current stock price corresponds to PE of 21.85, 18.39, and 16.17 times, respectively. Maintain a “buy” rating.

Risk warning

The risk of weak demand recovery in the consumer electronics industry, the risk of low market acceptance of new products from major customers, the risk of increased industry competition, and the risk that the company's product development progress falls short of expectations