Based on the accumulation of technology in the field of electroacoustics, the company actively promotes the vertical extension of the industrial chain and the horizontal expansion of the product line through endogenous epitaxial extension. Looking forward to the future, we are optimistic that the company will achieve steady growth with deep technical reserves in the headset+speaker sector; at the same time, it will continue to make efforts in emerging business fields such as AR glasses, smartwatches, and energy storage, opening a second growth curve. We expect net profit to be 0.11, 0.174, and 0.225 billion yuan in 2024-26, respectively. Covered for the first time, a “gain” rating was given.

Jiahe Intelligence: a leading domestic electroacoustic manufacturer. The company was founded in 2013 and listed on the Shenzhen Stock Exchange in 2019. At present, the company has formed a matrix of four major products: headphones, speakers, smart wearables, and energy storage. 24H1 headphones, speakers, smart wearables and other revenue accounted for 76.27%, 14.52%, and 9.21%, respectively.

Endogenous: R&D+customer+manufacturing advantages to build a moat. 1) R&D strategy: Adhere to the “five new” R&D strategy of “new products, new technologies, new devices, new processes, and new systems” to lead the industry's technological frontier and maintain product and technological competitiveness. 2) Customer strategy: The company accurately grasps domestic and foreign economic situations and market trends, implements a “big customer, big order” strategy, and maintains long-term and stable strategic partnerships with leading global manufacturers such as Harman, Beats, Anke, and iFLYTEK; 3) Manufacturing strategy: build a “Dongguan-Vietnam-Jiangxi” trinity layout, and schedule production capacity tasks at each base according to local conditions based on factors such as the specific needs of customer orders and differences in production costs in various regions.

Outreach: Actively promote epitaxial mergers and acquisitions to achieve horizontal and vertical expansion. At the beginning of its establishment, the company started with an electroacoustic business, then relied on epitaxial mergers and acquisitions to expand the product line horizontally and expand the industrial chain vertically. In 2021-24, the company successively invested in SOL Electronics, Ganfeng Lithium, Ryowell, Wuqi Microelectronics, Longjing Optoelectronics, and Jiachao Electronics, extending the vertical layout of core components of wearable products such as vibrators, chips, lithium batteries, etc., while horizontally expanding emerging product lines such as AR glasses and new energy, opening up a second growth curve.

Profit forecast: We expect revenue for 2024-26 to be 2.671, 3.025, and 3.405 billion yuan, respectively, +12.3%, +12.6% year-on-year; net profit to mother is 0.11, 0.174, and 0.225 billion yuan, respectively, -17.4%, +58.7%, and +29.3%. Covered for the first time, a “gain” rating was given.

Risk warning: risk of exchange rate fluctuations, risk of downstream demand falling short of expectations, risk of increased market competition.