?Incident: 1-3Q24 achieved operating income of 177.177 billion yuan (YoY +13.67%), net profit attributable to mother of 9.075 billion yuan (YoY +23.06%), after deducting non-return net profit of 8.117 billion yuan (YoY +15.43%). Looking at the split, 3Q24 achieved revenue of 73.579 billion yuan (YoY +27.07%); net profit attributable to mother of 3.679 billion yuan (YoY +21.88%); net profit not attributable to mother of 3.158 billion yuan (YoY +9.71%).
The company announced its 24-year profit forecast: estimated net profit of 13.143 billion yuan to 13.691 billion yuan, a year-on-year increase of 20.0%-25.0%; estimated net profit deducted from 11.486 billion yuan to 12.713 billion yuan, a year-on-year increase of 12.76%-24.82%.
Business dimension: Leveraging the advantages of vertical integration and collaboration. In the consumer electronics sector, the company relied on vertical integration and horizontal mergers and acquisitions to achieve substantial breakthroughs in improving core consumer electronics capabilities and expanding business scale. Based on current deep experience and technical reserves in SMT, SiP, etc., the company has acquired all assets of the US radio frequency (RF) front-end chip manufacturer Weixun Joint Semiconductor (Qorvo) in Beijing and Dezhou, Shandong, to further cultivate the company's precision manufacturing capabilities in RF front-end modules and strengthen vertical integration service advantages, and promote the company to achieve leapfrog development from system packaging to module packaging; in the communications and data center sector, the company collaborates with leading chip manufacturers to forwardly develop 800G and 1.6T for mainstream data centers and cloud service providers around the world With the next generation of high-speed connection standards, products in some segments, such as external high-speed copper cables, cables and connector components, backplane connectors and backplane cables, HSIO, and SSIO, have won customer recognition with leading technology, cost advantages, and excellent product performance. On this basis, products such as optical connectivity, heat dissipation, and power modules are comprehensively promoted to further in-depth cooperation with leading customers; in the automotive sector, the company combines a deep understanding of the safety and reliability of vehicle-grade products to quickly achieve cross-border empowerment of products related to the automotive industry, and has opened up a wide range of products related to the automotive business (high/low voltage wiring harnesses, high-speed wiring harnesses, charging guns, automotive connectors, smart cockpit controllers, LCD meters, 3-in-1 motor systems, AR HUD, DMS, etc.) Market space.
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Profit forecasts and investment recommendations. The company still follows the “three five years” strategic guidance, strengthens the development of existing businesses and the forward-looking layout of new fields, new technologies and new products, and relies on the advantages of independent research and development of precision intelligent manufacturing platforms and process processes to achieve mutual integration and interoperability of the company's resources in the fields of consumer electronics, communications, automobiles, etc., to create a complete vertical integration and closed loop of the industry, and promote the steady development of the company's operations in the expected direction. We expect Lixun Precision's EPS to be 1.87, 2.47, and 3.00 yuan respectively from 2024 to 2026. Based on the valuation situation of comparable companies, Lixun Precision was given a PE valuation of 20-25 times in 2024, with a corresponding reasonable value range of 37.40-46.75 yuan, giving it a “superior to the market” rating.
Risk warning. The risk that the NEV market is developing slowly or falls short of expectations; risks brought about by slowing 5G construction progress or policy changes; and demand in the consumer electronics market falls short of expectations due to the global macroeconomic downturn.
