Huichuangda is a high-tech enterprise specializing in the development of materials and devices. It focuses on independent research and development of micro-nano thermal imprinting production processes for light-guided structures. Through its own technical advantages accumulated over many years in core aspects such as optical microstructure design, micro-nano imprint mold development, and automated manufacturing, it has laid a solid foundation for the company to gain a competitive advantage in product fields such as notebook keyboard backlight modules, light guide films, membrane switches, and ultra-small waterproof switches.

The traditional business pattern evolves, and there is still clear room for growth in the industry's countercyclical cycle: 1. Advancement of notebook keyboard backlight technology brings room for continuous improvement in stand-alone ASP: 2023 is an important year of changes in the path of notebook keyboard backlighting technology. The change from the traditional combination of several optical films to single-button Mini LED has clearly improved the ASP of the keyboard backlight module. This change in application will bring considerable incremental flexibility to the company. 2. Ultra-compact waterproof switches have entered a period of growth for key customers: The main downstream of ultra-compact waterproof switches are fields with high miniaturization requirements, such as smartphones and wearables. In the past, they were monopolized by Japanese manufacturers. Huichuangda is the only domestic enterprise that can break the monopoly of Japanese manufacturers. It is expected to receive support from key customers in the future. After successfully passing the testing period, there is considerable room for alternative growth. 3. Xinweixing, which was acquired in 2022, is an important connector supplier for key downstream supply chain customers. The promised performance in 2023 was a net profit of 44 million yuan. Judging from the industry pattern and upstream and downstream conditions, we expect it to be successfully completed.

CCS is driving the company to open up new sources of growth in the field of new energy: CCS is a new type of carrying method for battery BMS systems. Using FPC to replace copper wire harness collection lines is an advanced solution rapidly promoted by power and energy storage battery manufacturers in recent years. Huichuangda has an early CCS layout, is more advanced among domestic manufacturers, and already has clear customer channel resources. 2023 is a critical period for Huichuang CCS's production capacity release and growth, which will become a new source of growth for the company.

Investment advice: The company's net profit from 2022 to 2024 is estimated to be 162 million, 283 million, and 492 million yuan respectively. The PE corresponding to the current market value is 35.2, 20.1, and 11.6 times, respectively, and 25 times PE in 2023, corresponding to the target price of 42.62 yuan/share, covered for the first time, and given a purchase rating.

Risk warning: The extent of the company's CCS automated production line construction and the certification and introduction progress of downstream customers fell short of expectations; shipments from key downstream customers of ultra-compact waterproof tactile switches fell short of expectations; post-epidemic NB market growth fell short of expectations, causing notebook backlight modules and other related products to fall short of expectations.