FENGHUA(000636) 华泰证券·2024-09-01 10:03Investment Rating - Maintains a "Buy" rating with a target price of RMB 15.60 [1] Core Views - The company's profitability significantly improved in 2Q24, with net profit attributable to the parent company increasing by 402% YoY [1] - Gross margin and net margin reached a two-year high, driven by steady growth in production and sales of resistors, capacitors, and inductors, as well as improved material self-sufficiency [1] - The company's revenue for H1 2024 reached RMB 2.391 billion, a YoY increase of 15.18%, with Q2 revenue at RMB 1.333 billion, up 16.73% YoY and 25.98% QoQ [1] - Adjusted net profit forecasts for 2024-2026 are RMB 450 million, RMB 620 million, and RMB 760 million, respectively, reflecting the company's leading position in the domestic electronic components market and its advantages in MLCC high-end transformation [1] Financial Performance - 2Q24 gross margin improved to 22.39%, a YoY increase of 7.9 percentage points, while net margin reached 10.09%, up 7.7 percentage points YoY [2] - Operating expenses ratio in 2Q24 was 9.31%, showing a YoY and QoQ decline due to cost control measures [2] - Sales, management, and R&D expense ratios decreased by 1.0 and 1.3 percentage points YoY, respectively, while financial expense ratio increased by 2.0 percentage points [2] Product and Market Development - The company achieved breakthroughs in key technologies for high-end products, including high-temperature, high-voltage ceramic powders for MLCC and self-developed slurries, which reduced raw material costs [3] - Launched a series of high-end products such as integrated inductors, 01005 ultra-miniature inductors, alloy resistors, and MLCCs [3] - Sales in the automotive electronics sector increased by 68% YoY, while the communications and industrial control sectors grew by 35% and 18%, respectively [3] - Expanded into emerging markets such as computing power, energy storage, and drones, with significant progress in international markets, particularly in Asia and Europe [3] Valuation and Forecasts - The company is valued at 40x expected PE for 2024, with a target price of RMB 15.60, reflecting its leading position in the domestic MLCC market and its high-end strategy [4] - Forecasted EPS for 2024-2026 are RMB 0.39, RMB 0.53, and RMB 0.66, respectively [4] Historical Financial Data - Revenue for 2022, 2023, and 2024E are RMB 3.874 billion, RMB 4.221 billion, and RMB 5.245 billion, respectively, with YoY growth rates of -23.37%, 8.97%, and 24.25% [5] - Net profit attributable to the parent company for 2022, 2023, and 2024E are RMB 327.04 million, RMB 173.48 million, and RMB 445.47 million, respectively, with significant YoY growth in 2024E [5] - ROE for 2022, 2023, and 2024E are 2.83%, 1.50%, and 3.73%, respectively, showing a recovery trend [5]