The 2024 quarterly report exceeded expectations. It is optimistic that the automotive connector business will grow at a high rate of 3.129 billion yuan, YoY +5.37%; net profit due to mother of 356 million yuan, YoY -19.64%; of these, Q4 revenue for 2023 was 924 million yuan, YoY +22.36%; net profit to mother was 109 million yuan, YoY +254.46%; gross profit margin of 31.26%, YoY +2.75%. In addition, the company announced financial results for the first quarter of 2024, with 2024Q1 revenue of 1.04 billion yuan, YoY +68.77%; net profit to mother of 162 million yuan, YoY +244.43%; gross profit margin 35.31%, YoY +3.52%. The company's revenue and profit margin for the first quarter exceeded expectations, mainly due to significant growth in the consumer and automotive electronics business, and the subsidiary Henghe's shipments improved compared to 2022. Considering that the automotive electronics business continues to grow at a high rate, we raised our 2024/2025 forecast and added a 2026 performance forecast. The net profit for 2024/2025/2026 is estimated to be 6.2/8.1 billion yuan (previous value: 46/570 million yuan), and the current stock price corresponds to PE 27.7/21.0/16.5 times. We are optimistic about the company's long-term development and maintain a “buy” rating.
Automotive connector revenue grew rapidly in 2023, and the consumer electronics business steadily rebounded in 2023H2. In 2023, the company's automotive connector revenue was 823 million yuan, YoY +56.21%. Automotive connector shipments have maintained rapid growth. Mainly, the company has a complete range of automotive connector products. Many leading domestic automotive customers have successfully introduced them, and large-scale shipments have been achieved. Furthermore, as the scale effect of the company's automotive connector business becomes apparent, process optimization, and cost control is strengthened, the profit level is expected to remain stable. RF connectors and interconnection systems business revenue was $799 million, YoY -8.48%. The smartphone industry was affected by factors such as macroeconomics and domestic and foreign demand fluctuations. End customer shipments showed a trend of low to high levels, and company orders rebounded in 2023H2.
Stabilize the basic consumer electronics and automotive market, and actively explore the 5G millimeter wave and AI sector layout. In terms of product strategy, the company has existing products to stabilize its position in the mobile consumer electronics market while increasing its expansion efforts to major overseas customers in the non-mobile consumer electronics industry. On the other hand, the company seizes development opportunities in the automotive connector industry and continues to upgrade R&D and platform manufacturing capabilities for high-frequency high-speed automotive connectors. In terms of new product development, the company will develop RF BTB products based on 5G materials to meet the needs of the 5G millimeter wave market. In addition, the company will also actively lay out new high-frequency and high-speed connector products in the field of AI computing power to enhance the competitiveness of related products in the market.
Risk warning: Vehicle price risk, 5G millimeter wave development falls short of expectations, consumer electronics demand falls short of expectations.