Incident Overview

On October 30, the company released its report for the third quarter of 2024. The company achieved revenue of 0.644 billion yuan, yoy +27.57% in 2024Q1-3, of which 2024Q3 achieved revenue of 0.255 billion yuan, yoy +23.41%; 2024Q1-3 net profit of 0.03 billion yuan to mother, yoy +21.01%.

Analysis and judgment

Take advantage of the recovery to establish a basic consumer electronics market and strengthen the market position of core customers in the industry.

The company has long been deeply involved in 3C consumer electronics connectors and precision mechanical components, and has become the main supplier for many leading domestic wearable brands. We believe that the cyclical recovery of the consumer electronics sector in 2024 is expected to provide lasting momentum for the continued expansion of the company's connector revenue scale; at the same time, the company responds to customer needs and combines its own advantages to promote the iterative upgrading of its MIM component products from all angles to accelerate the shipment of original MIM component products and the introduction and verification of new products.

In terms of customer development, some of the company's precision connectors and mechanical parts products have also been applied to some series of Huawei phones through customer channels. We believe that with the innovation and upgrading of consumer electronics terminal applications and forms, the company is also expected to continue to develop high-quality customers with its supply chain advantages and help expand its revenue scale in the long term.

Continue to increase R&D and innovation, and the development and introduction of new products have been very effective. Since 2024, the company has increased research and development, and continued to expand R&D material investment and R&D personnel recruitment in terms of new product development. 2024Q1-3 has invested about 0.056 billion yuan in R&D expenses, yoy +67.90%; as of 2024H1, various key stages of the company's early layout, such as development of new products and customer verification and introduction, have achieved significant progress: Among them, automotive automotive connector products have passed the factory review of some important overseas Tier 1 manufacturers and successfully obtained their supplier codes (Vendor Codes), and passed Sample verification and introduction of a major domestic customer; board-to-board (BTB) connectors enable batch shipment to core customers. The semiconductor metal heatsink products laid out by the company can be used in a variety of cutting-edge and broad fields, including semiconductor components such as computing power CPU processors, GPUs, and AI; by September 2024, semiconductor metal heatsink products have completed sample delivery to many important end customers, and have successfully completed small-batch shipment and delivery to 1-2 core customers starting in September, and is also expected to achieve formal batch supply to some core customers throughout 2024. Furthermore, the company is also paying close attention to the development potential of a new strategic industry called the low-altitude economy.

Investment advice

Maintain an “Overweight” rating. We adjusted the company's 2024-2026 net profit forecast to 0.05/0.117/0.192 billion yuan. The corresponding EPS was 0.24/0.57/0.93 yuan, respectively, and the corresponding PE valuation was 97/41/25 times, respectively.

Risk warning

The company's R&D fell short of expectations, the recovery in terminal demand fell short of expectations, and the promotion of new products fell short of expectations