The company released its 2023 annual report: the annual operating revenue was 5.72 billion yuan,+7.2% year on year, the net profit attributable to the parent company was 700 million yuan,+14.0% year on year, and the net profit not attributable to the parent company was 650 million yuan,+14.9% year on year.
In terms of products, the scale and gross profit margin of the company's electronic products will increase slightly in 2023. The annual revenue will be 2.25 billion yuan,+5.0% year-on-year, the gross profit margin will be 37.0%,+2.7 pct year-on-year, and the 23H2 gross profit margin will be 39.2%, significantly better than 34.3% in the first half of the year. We believe that the company will benefit mainly from the decline in the price of raw materials The average price of PVC, EVA, etc. in 2023 will be respectively 0.81/0.61/1.42 million yuan/ton, - 4%/- 18%/- 35% year-on-year; The annual revenue of wire products was 1.16 billion yuan, - 14.5% year-on-year, and the gross profit rate was 15.8%, - 4pct year-on-year; The annual revenue of power products is 1.28 billion yuan,+22.3% year-on-year, gross profit rate is 40.5%,+1.6 pct year-on-year; The annual revenue of new energy products was 860 million yuan,+29.6% year on year, and the gross profit margin was 31.8%, - 2.3 pct year on year.
In terms of major subsidiaries, Shanghai Kete achieved a net profit of 54 million yuan, - 5.6% YoY, Wal Hong Kong Trade (the parent company of Leting Zhilian) achieved a net profit of 60 million yuan, - 42.4% YoY, Wal New Energy achieved a net profit of 68 million yuan,+16.7% YoY, and Wal Xinyuan Wind Power achieved a net profit of 81 million yuan, basically unchanged YoY.
24Q1 performance is expected to increase significantly. According to the company's pre increase announcement, it is estimated that the net profit attributable to the parent company will be RMB 177-208 million in 24Q1, with a year-on-year increase of 70% - 100%, and the net profit excluding non attributable to the parent company will be RMB 164-193 million, with a year-on-year increase of 70% - 100%.
The wire business is expected to benefit from the development of AI servers and intelligent driving. The high-speed communication line produced by Leting Zhilian is a passive DAC copper cable. In terms of short distance signal transmission, it has the advantages of low power consumption, high cost performance and high speed. It is widely used in data center, server, switch/industrial router and other data signal transmission. Products of some specifications can be used in AI servers. The main customers include Amphenol, Hollis, Molex Tyco, etc., have achieved stable mass production of 400G and 800G high-speed communication lines, and the single channel 224G high-speed communication lines are still in the stage of cooperating with major customers such as Amphenol in proofing. In terms of automobile line, the company has completed the development of 25G on-board Ethernet cable, which can be widely used in the data transmission of automobile laser radar and backbone network systems. It has the characteristics of stable signal transmission rate, high speed, waterproof, high temperature resistance, etc.
Maintain a "highly recommended" investment rating. Considering that the company's performance in the first quarter exceeded expectations, we raised our profit forecast. It is estimated that the net profit attributable to the parent company in 2024-26 will be 850 million yuan/99 million yuan/116 million yuan, corresponding to a P/E ratio of 17.5/15.0/12.8 times, and maintain the investment rating of "strongly recommended".
Risk tips: macroeconomic environment and policy risk, industry competition risk, raw material price fluctuation risk, company operation risk, new energy demand less than expected or technical route change, etc.
