Event: the company released its third-quarter results report.

Consumer electronics demand is weak, short-term disturbance does not change long-term upward. In the first three quarters, the company's total revenue reached 3.02 billion, an increase of 37% over the same period last year, of which Q3 achieved 902 million revenue, down 11% from the same period last year. The net profit of Q3 in the first three quarters is about 200 million yuan, of which the net profit of Q3 in a single quarter is 60 million yuan, which is lower than the same period last year. The slight decline in revenue and profit is mainly affected by factors such as downstream consumer electronics boom and short-term pressure on gross profit margin. On the whole, the layout of the company is diversified and globalized, and the driving force for subsequent growth is still sufficient.

Solid performance in the field of consumer electronics, automotive electronics, smart wear, new energy and other areas of business continues to enrich. The company's 2022H1 consumer electronics sector had revenue of 1.7 billion yuan, nearly doubling year-on-year growth. On the one hand, it continues to provide support for many best-selling products of Huawei, Huawei's annual flagship MatePadPro project has produced goods, on the other hand, it has introduced famous consumer electronics brands such as Glory and XIAOMI. At the same time, the company's multi-dimensional industrial layout, vigorously expand automotive electronics, smart wear, new energy and other areas of business. In terms of automotive electronics, the Q2 Valeo project is officially in mass production and is expected to scale up gradually. In addition, the company has successfully passed the audit of BMW two-wheeled vehicle products; the company has reached a cooperation with XIAOMI in terms of smart wear. In terms of new energy, the company began mass production and delivery in the fields of photovoltaic inverters, household energy storage systems, two-wheeler battery BMS systems, etc., of which Q3 officially delivered the solar technology micro inverter project, which is expected to benefit from the vigorous development of the new energy industry and optimize the company's products and customer structure.

Actively expand the international territory, overseas markets can be expected in the future. The company has set up production bases in Vietnam, India, Bangladesh and other places, gradually releasing local production capacity to protect the follow-up business development and strategic cooperation. Previously, India's Guanghong maintained a monthly production of more than 1 million units in the first half of the year, and the self-built part of the first phase of Vietnam's Guanghong has been completed. at present, it produces about 100, 000 XIAOMI mobile phones per month, and the official project will be gradually introduced in Q3 and Q4. The base in Bangladesh successfully shipped 1 million mobile phones, with a current monthly production capacity of about 200000 units. Capacity expansion ensures growth, which will help the company expand new overseas customers and cooperate deeply with existing customers, so as to achieve further revenue growth.

We forecast that the company's earnings per share in 22-24 years will be 0.47 yuan 0.61 yuan 0.76 yuan respectively (the original forecast for 22-23 years will be 0.75 yuan 1.02 yuan respectively, mainly considering the reduction of gross profit margin forecast due to the weak consumer electronics demand). According to the comparable company's 22-year 25 times PE valuation level, the target price will be 11.75 yuan and the buy rating will be maintained.

Risk hint

Sales of major customers fall short of expectations; risk of changes in the international environment; progress in overseas production capacity falls short of expectations