Description of the event

The company announced its 2023 annual report and 2014 quarterly report. For the full year of 2023, the company achieved operating income of 3,861 billion yuan, +3.62% year-on-year, and net profit to mother of 198 million yuan, +27.08% year-on-year. The first quarter of 2024 achieved operating income of 1.102 billion yuan, +37.42% year-on-year, and net profit to mother of 81 million yuan, +320.81% year-on-year. At the same time, the company expects revenue of around 4.85 billion yuan in 2024.

Incident reviews

The company's revenue grew steadily in 2023, the P&S and SMC business grew year-on-year, and the MIM business was affected by the downstream consumer electronics business and showed a high trend in 2023. Benefiting from the rapid growth of industries such as automobiles, photovoltaics, and energy storage, the company's P&S and SMC business sales have all increased and maintained a steady growth trend. The MIM business was affected by the consumer electronics industry's inventory removal in the first half of 2023, but in the second half of the year, benefiting from industry recovery and the release of new folding screen mobile phones, there was a marked recovery in revenue.

In the first year of the release of folding screen phones, the company fully benefited from industry trends. According to IDC's forecast, the domestic folding screen market will reach a market size of 15 million units in 2027, and the growth rate is obvious. As the leading domestic MIM hinge supplier, the company set up a folding screen shaft design and assembly department to achieve leapfrog development from MIM parts to parts+modules.

Lay out a new axial flux motor project to expand downstream application areas. By increasing its shareholding in Shenzhen Xiaoxiang Electric and laying out the field of axial magnetic flux motors, the company achieved sales revenue of 256,900 yuan of robot joint motors in 2023. Compared with traditional motors, axial magnetic flux motors have the characteristics of being smaller in size, lighter in weight, and more efficient. In the future, they are expected to be used in fields such as new energy vehicles, robots, drones, electric ships, and electric aircraft, fully opening up downstream applications.

The 2024 quarterly report showed a high year-on-year increase, and the annual revenue guide maintained a high growth rate of 4.85 billion yuan.

The first quarter of 2024 achieved operating income of 1.102 billion yuan, +37.42% year-on-year, and net profit to mother of 81 million yuan, +320.81% year-on-year. The annual revenue guide is 4.85 billion yuan, and the revenue growth rate is expected to be 25%. MIM business revenue grew 171.67% year-on-year in the first quarter. The number of new products released by downstream consumer electronics customers boosted the company's revenue, parts utilization rate continued to increase, and the module business was introduced smoothly.

Investment advice

The company's 2024-2026 revenue is expected to be 49.63/5.886/6.06 billion yuan, up 28.5%/18.0%/12.8% year on year, and the company's net profit is expected to be 4.24/5.33/ 628 million yuan, up 114.1%/25.8%/17.9% year on year, corresponding EPS is 0.69/0.86/1.02 yuan, PE 22.1/17.6/14.9 times. Considering that the company has a clear advantage in the folding screen supply chain, benefiting from the rapid growth of the folding screen mobile phone industry, it was given a “buy-A” rating for the first time.

Risk warning

Risk of macroeconomic fluctuations: The international and domestic economy faces challenges. The company's downstream demand mainly comes from consumer electronics terminals, automobiles, photovoltaics, etc., which are clearly affected by economic fluctuations. Uncertainty about economic recovery will directly affect company demand.

The development of new technology falls short of expectations: The company's MIM business is used in the folding screen phone industry. The folding screen phone technology is currently immature, and there is a risk that it will fall short of expectations.

Industry competition increases risk: The downstream products of the company are mainly consumer electronics, automobiles, photovoltaics, etc. There are many competitors in the industry, and product upgrades require high technical requirements, leading to an unstable competitive pattern in the industry. If the company's technology research and development falls short of expectations, there is a risk that its market share will decline.