Incidents:

The company released its report for the third quarter of 2024. In the first three quarters of 2024, the company achieved operating income of 177.177 billion yuan, an increase of 13.67% over the previous year; net profit to mother was 9.075 billion yuan, an increase of 23.06% year on year, in line with the range of 8.849-9.218 billion yuan in the company's performance forecast for the first three quarters. Among them, in the 24Q3 single quarter, the company achieved operating income of 73.579 billion yuan, up 27.07% year on year and 43.73% month on month; net profit to mother was 3.679 billion yuan, up 21.88% year on year, up 25.77% month on month.

The company released a performance forecast. It is expected to achieve net profit of 13.143-13.691 billion yuan in 2024, an increase of 20.00%-25.00% over the previous year, and achieve net profit without deduction of 11.486-12.713 billion yuan, an increase of 12.76%-24.82% over the previous year. Based on this calculation, the company expects to achieve net profit of 4.068-4.616 billion yuan in the 24Q4 single quarter, an increase of 13.69% to 28.99% over the previous year. The company's expected performance growth is mainly due to the company's active deepening vertical integration of the industrial chain, actively laying out new products, new technologies and new fields, and promoting the efficient collaborative development of business sectors such as consumer electronics, communications, and automobiles.

Ai iPhone is expected to boost the switching cycle, and the fruit chain faucet will fully benefit:

Apple announced the new iPhone 16 series on September 10, and Apple Intelligence will also launch in some regions with the iOS 18.1 update at the end of October. Apple relies on its entire ecosystem of chips, software, and systems to create AI terminals that are better to use. As an OEM and component leader in the Apple industry chain, the company continues to refine the underlying technology with sound, light, electricity, heat, magnetism, and radio frequency as the core. With the support of new processes and new processes, the company combines the rapid large-scale mass production and process innovation capabilities that the industry has been deeply involved for many years to provide one-stop product landing services from components, modules to system solutions for leading global brand customers, and is expected to fully benefit from the increase in hardware value and sales boost brought about by the 2025 Apple Innovation Year.

Computing power construction has driven the rapid development of the communications business, and the company entered the market as a standard setter:

The development of AI big models is driving the acceleration of global AI infrastructure construction, and the company has deep technology accumulation in products such as electrical connections, optical connections, power supplies, air cooling/liquid cooling, and radio frequency. The company efficiently collaborates with leading global chip manufacturers to conduct forward-looking pre-research on optoelectronic high-speed interconnect products for mainstream data centers and cloud service providers around the world, and jointly develop high-speed connectivity standards for next-generation AI clusters, which is expected to fully benefit.

The proposed acquisition of automotive cable giant Leoni takes the automotive business to the next level:

According to the announcement, the company plans to acquire 50.1% of Leoni AG's shares and 100% of its wholly-owned subsidiary, Leoni K. Leoni is the world's leading supplier of cable, wire and wiring harness system solutions. With this acquisition, the company is expected to achieve resource sharing, complementary advantages and strategic collaboration with Leoni, rapidly forming the company's differentiated competitive advantage in the global automotive wiring field and greatly enhancing the competitiveness of the automotive business.

Investment advice:

We expect the company's revenue growth rates from 2024 to 2026 to be 14.0%, 12.3%, and 15.6%, respectively, and net profit growth rates of 24.0%, 23.0%, and 25.4%, respectively. We maintain the company's buy-A investment rating, with a 6-month target price of 47.00 yuan, which is equivalent to a dynamic price-earnings ratio of 25.00x in 2024.

Risk warning: consumer electronics terminal sales fluctuation, transaction approval risk, exchange rate fluctuation, risk of increased industry competition.