23Q3's performance increased significantly. The comprehensive layout precision structural parts business achieved operating income of 115 million yuan in the third quarter of 2023, up 21.97% year on year, up 23.98% month on month, and realized net profit of 0.2 billion yuan, up 22.85% year on year, up 19.35% month on month; gross sales margin was 31.88%, down 2.04 pcts year on year, up 9.66 pcts month on month; net sales margin was 17.63%, up 0.12 pcts year on year, up 6.51 pcts month on month . The company achieved operating income of 269 million yuan in the first three quarters, down 3.93% year on year; realized net profit of 43 million yuan, down 18.87% year on year; gross sales margin was 30.56%, down 3.64 pcts year on year; net sales margin was 15.84%, down 3.02 pcts year on year.
The company is mainly engaged in R&D, production and sales of precision structural parts. The products are mainly used in smart phones, wearable devices, smart housing and automotive electronics industries.
Deeply involved in the field of smart phone precision structural parts and focus on high-quality major customers to build moats
From January to June 2023, the company's smartphone business achieved revenue of 93.8984 million yuan, accounting for 61.65%. The company's smart phone precision structural parts business mainly includes two major categories: lens components and camera modules. The lens is the core component of the smartphone optical imaging system. The main products include lens tubes, spacers, pressure ring products, etc. In terms of camera modules, according to different focusing methods, camera modules can be mainly divided into fixed focus modules and autofocus modules. The company can produce related parts of camera modules, including bases, mirror mounts, shields, and carriers. The company's related products are mainly used in the field of mobile phone cameras. Cameras are mainly composed of optical lenses, voice coil motors, infrared cutoff filters, and image sensors. Among them, optical lenses account for 19% of mobile camera value components, and modules account for 20%. The company focuses on leading customers in the industry and has stable major customer resources, mainly customers such as Shunyu Optics, Amphenol, Crystal Optoelectronics, Changyi Optoelectronics, and Samsung Electric. Among them, Sunyu Optical's mobile phone lens market share has ranked first in the world for many years in a row, and the mobile phone camera module market share has also ranked first in the world since 2021; Amphenol is one of the world's largest connector manufacturers. Looking at downstream terminal brands, the main brands of the application company's products include A customer, Samsung, Xiaomi, OPPO, VIVO, etc. In the past two years, the related revenue growth rate from A customers (Amphenol) has been significantly higher than that of Android customers (Sunyu Optics, etc.). Furthermore, we can also see that the company's export sales ratio in recent years has increased compared to the past. We believe that with the gradual implementation of the strategy of focusing on high-quality major customers, the company will further strengthen its moat and is expected to become a leading enterprise in the field of precision smartphone structural parts.
Precision structural parts have a wide range of downstream applications, and continue to expand new fields to improve the company's performance resilience
In addition to smartphones, precision structural parts are widely used in fields such as wearable devices and automotive electronics, and the company continues to expand markets in the fields of wearable devices, smart security, and automotive electronics in line with the market. In the field of wearable devices; the main products mainly include smartwatch antennas, headphone cases, VR glasses, and pressure rings. From January to June 2023, the wearable device business achieved revenue of 15.703 million yuan, accounting for 10.31%. In the field of intelligent security; the main products include hemispherical dome covers, transparent window covers, multi-eye dome covers, threaded lens tubes, etc. From January to June 2023, the company's intelligent security business achieved revenue of 5 million yuan, accounting for 3.29%. In the field of automotive electronics, the main products include car lens tubes, mirror holders, cases, brackets, etc. From January to June 2023, the company's automotive electronics business achieved revenue of 377.15,500 yuan, accounting for 24.76 million yuan. We believe that as the company expands into various downstream fields, the company's ability to cope with cyclical changes and resilience to risks in a single industry can be improved, and the company's performance is expected to maintain steady growth.
Profit forecasting
The company's revenue for 2023-2024 is 3.88, 9.01, and 1,361 billion yuan, respectively, and EPS is 1.04, 2.51, and 3.77 yuan respectively. The current stock price is 55.2, 22.9, and 15.3 times PE, respectively. Benefiting from further iterative upgrades of optical lenses in high-end domestic flagship models, the company's performance is expected to continue to be empowered and given a “buy” investment rating.
Risk warning
Demand from major downstream customers falls short of expectations; industry competition intensifies; precision mold development technology falls short of expectations.