Incident: Dari Electronics released its 2024 three-quarter report. In the first three quarters of 2024, the company achieved revenue of 1.772 billion yuan, a year-on-year increase of 91.54%; net profit to mother was 0.182 billion yuan, an increase of 281.25% over the previous year.

Looking at Q3 alone, the company achieved revenue of 0.675 billion yuan in 2024Q3, an increase of 87.35% year on year; net profit to mother was 0.077 billion yuan, an increase of 153.97% year on year.

The increase in orders for consumer electronics and new energy has driven both the company's revenue and profit growth. According to the company's announcement, the company's consumer electronics business and new energy business orders increased in the first three quarters of 2024 compared to the same period last year, and the company's revenue and net profit achieved significant year-on-year growth. In terms of consumer electronics, smartphones, personal PCs and tablets are the company's main consumer electronics application terminals currently in the customized components and supporting automation equipment business. Based on the gradual recovery of demand in the terminal product market, the company's current consumer electronics business recovery and continued increase in shipments, as well as good project expansion and order volume increases for the company's main customers, which led to a significant year-on-year increase in the company's consumer electronics business revenue; in the context of the new energy industry, the company's consumer electronics business revenue has increased significantly over the same period last year; in the context of the new energy industry, the company's new energy structure and functional component products revolve around power and storage Segmented application fields such as energy battery systems, new energy vehicle headlights, and electric drive electronic control continue to expand in depth. As the company's early-stage targeted new energy projects moved into the batch delivery stage and production capacity was gradually released, the company's new energy business revenue maintained a relatively rapid year-on-year growth trend, and scale effects gradually became apparent.

Expenses are properly controlled, and operational efficiency is improved. In the first three quarters of 2024, the company incurred a total of 0.226 billion yuan in expenses during the period, with an expense ratio of 12.78%, down 11.00 pcts from the same period last year, and operational efficiency was significantly improved.

Establish a basic consumer electronics market and accelerate the layout of the new energy business. As a platform supplier for “key components (functional devices, structural devices) and supporting automation equipment”, the company adheres to the big customer strategy. After more than 20 years of development, the company has accumulated a large number of stable and high-quality customer resources in the consumer electronics field, including Samsung Vision, which has an advantageous global market share in the OLED display industry, and Apple, Jabra, Bose, Sony, Sennheiser, Oppo, Lenovo, Sonos, ByteDance, etc. Well-known FPC soft board customers at home and abroad such as Pengding Holdings, Huatong Computer, Taigun Technology, Fujikura Electronics, Amphenol, etc., as well as well-known EMS customers in the consumer electronics industry, such as Lixent Precision, Goertek, Foxconn, and Casmo, have become important supporting enterprises for the development and production of new products for these customers. Starting in 2022, the company grasped the development trend of the electronics manufacturing industry, actively expanded the new energy structure and functional component business with its competitive advantage in the consumer electronics field, and quickly entered the supply chain system of well-known enterprises in the new energy industry. It has now entered the supply chain system of well-known companies in the new energy industry such as Ningde Era, BYD, REPT BATTERO, SAIC Iraq Control, Sunshine Power, and Haichen Energy Storage. By providing high-quality products and services to leading customers in the new energy industry, the company has gradually built up the company's ability to provide solutions in the field of new energy business.

Profit forecasting

We expect the company to achieve revenue of 2.398, 2.908, and 3.353 billion yuan in 2024-26, and achieve net profit of 0.262, 0.391, and 0.497 billion yuan, corresponding to PE 22.92, 15.38, and 12.09x. This is the first coverage, giving the company a “buy” rating.

Risk warning: risk of fluctuations in industry sentiment; risk of downstream demand falling short of expectations; risk of new product expansion falling short of expectations