Introduction to this report:
Continuing to develop new tracks, the company's performance is expected to grow rapidly. In 2023, we achieved revenue of 6.210 billion yuan (+3.16% YoY), net profit to mother of 750 million yuan (+35.11% YoY), and our profitability increased to the highest level in 19 years.
Key points of investment:
Maintain the target price at $82.10 and maintain the “Overweight” rating. Referring to the company's performance and comparable company valuations, the 24-25 EPS was adjusted to 2.16/2.78 (previous value was 2.34/3.13 yuan), and the 26-year EPS was added to 3.32 yuan, 38 times PE was given in 24 years, the target price was maintained at 82.10 yuan, and the “gain” rating was maintained.
Connectors grew steadily, and net interest rates reached their highest level in 19 years due to improved governance. Benefiting from high demand in fields such as defense equipment and commercial aerospace, the company's revenue grew steadily. By business: 1) Relays: achieved revenue of 330 million yuan, yoy -9.2%, gross margin increased 4.56 pcts to 46.4%; 2) Connectors and interconnect integrated products: achieved revenue of 4.43 billion yuan, yoy +14.3%, gross margin increased 6.06 pcts to 38.5%; 3) Motors and control components: achieved revenue of 1.26 billion yuan, yoy -16.2%, gross margin increased 5.81 pcts to 35.3%; 4) Optical communication devices: achieved revenue of 1.3 billion yuan At 100 million yuan, yoy +8.5%, gross margin increased 0.66pcts to 23.3%. The company continued to deepen internal governance, and gross margin increased by 5.0 pcts to 38.0% year-on-year in 2023. Net profit margin increased 3.2 pcts to 14.0%, the highest level since 2019.
Open up a new business circuit, and equity incentives stimulate employee motivation. 1) New products such as aerospace connectors, high-speed series connectors, and microwave components have achieved market breakthroughs and achieved batch orders, and have been applied in commercial aerospace, artificial intelligence, and new energy. 2) The company completed the registration of the first restricted stock incentive plan in May 2023. The implementation of equity incentives helped stimulate employees' enthusiasm and demonstrated the company's confidence in subsequent continuous development.
Catalyst: The company invests in the construction of civil connectors and civil motors industries in Zengcheng, Guangzhou.
Risk warning: The growth rate of military orders falls short of expectations, and downstream demand such as communications falls short of expectations.