Summary of Hongfa Technology Co Ltd Conference Call Company Overview - **Company**: Hongfa Technology Co Ltd - **Industry**: Industrials, specifically focusing on relays and electrical components - **Market Cap**: Rmb37,484 million - **Stock Rating**: Overweight - **Price Target**: Rmb37.00, with a 3% upside from the current price of Rmb35.95 Key Financial Highlights - **FY24 Performance**: - Revenue: Rmb14,669 million, up 9% YoY - Net Profit: Rmb1,560 million, up 12% YoY - EBITDA: Rmb3,327 million, up 4% YoY - **4Q24 Results**: - Revenue: Rmb3.2 billion, a 6% increase YoY but a 11% decrease QoQ - Net Profit: Rmb362 million, a 25% increase YoY but a 15% decrease QoQ - Management expects revenue growth of approximately 10% YoY for 2025, supported by high-margin new energy and automotive relays [9][6][12] Growth Drivers - **New Energy and Automotive Relays**: - Expected to drive approximately 10% YoY growth in 2025 - Management is optimistic about domestic market conditions due to a higher order backlog and potential policy stimulus - Anticipated growth of 20-30% YoY for new energy vehicle (NEV) relays and around 15% for automotive relays in 2025 [2][9] - **New Product Revenue**: - New products are projected to reach Rmb4-5 billion in revenue over the next five years, with significant growth in PDU/BDU (+236% YoY) and current sensors (+81% YoY) [3][9] - **Overseas Capacity Expansion**: - Expansion in Germany and Indonesia is on track, with the Indonesia plant expected to generate an output value of over Rmb600 million in its first phase [4][9] Risks and Challenges - **Market Risks**: - Potential downturn in global EV demand and a sharp decline in China's property market could negatively impact home appliance consumption [14] - Uncertainty surrounding US trade policies is expected to have an insignificant impact on operations [2] Valuation and Outlook - **Valuation Methodology**: - A target P/E of 20x is applied to the 2025 EPS estimate, consistent with the 10-year average forward P/E [12] - **Long-term Growth**: - Management's guidance indicates a steady growth trajectory, with expectations of continued margin expansion and diversification in product offerings [9][6] Conclusion - Hongfa Technology Co Ltd demonstrates solid profit growth and a resilient outlook for 2025, driven by new energy and automotive relays, alongside strategic overseas expansions. However, potential market risks, particularly in the EV sector and property market, warrant careful monitoring.

Core Viewpoint - The company, Hongfa Technology (宏发股份), has solidified its leading position in the relay industry, achieving stable growth in performance with a revenue of 14.102 billion yuan and a net profit of 1.631 billion yuan in 2024, marking a year-on-year increase of 9.07% and 17.09% respectively [1][2]. Group 1: Financial Performance - In 2024, the company reported a revenue of 14.102 billion yuan, a 9.07% increase year-on-year, and a net profit of 1.631 billion yuan, reflecting a 17.09% growth [1][2]. - The company achieved a per capita return of 120.8 thousand yuan, which is a 9% increase compared to the previous year [2]. - The proposed cash dividend is 0.515 yuan per share, totaling 537 million yuan, which accounts for 32.92% of the annual net profit [4][5]. Group 2: Market Position and Strategy - The company has increased its overall market share in the relay industry by 1.7 percentage points, maintaining its position as the global leader [1][2]. - The high-voltage direct current relay market share reached 40%, solidifying its top position [1]. - The company is implementing the "75+" strategy to enhance its core competitiveness and achieve sustainable development [2][5]. Group 3: Product Development - The company has made significant advancements in new product categories, with connector product shipments increasing by 28% and capacitor product shipments growing by 14% [3]. - The company completed the development of over 30 new fuse products, covering major applications in the new energy market, with total shipments reaching 3.55 million yuan [3]. - Research and development expenses for 2024 amounted to 785 million yuan, a 16.57% increase, representing 5.57% of revenue [5]. Group 4: Investor Returns - The company has maintained a consistent cash dividend policy, with a total of 2.45 billion yuan distributed over the past ten years, representing 30.22% of cumulative net profit [5]. - Future plans include a comprehensive approach to balance company growth and shareholder returns, ensuring a stable and sustainable return mechanism [6].

Investment Rating - The investment rating for the company is "Buy" [1] Core Views - The company maintains a leading position in the relay market, with a market share increase of 1.7 percentage points in 2024, ranking first globally. The high-voltage direct current relay market share is 40%, while the automotive relay market share has risen by 3.1 percentage points to 23.1%. In the power relay sector, the company has maintained a 57.1% market share while seizing global grid renovation opportunities [4] - The company has initiated the "75+" strategy, with positive momentum in the "5+" product development. In the low-voltage electrical sector, the company is integrating low-voltage electrical products with relays to create comprehensive solutions. Connector product shipments increased by 28% year-on-year, with exports to Vietnam and Turkey. Capacitor product shipments also grew by 14% year-on-year [4] - Profit forecasts indicate that the company's net profit attributable to shareholders will be 1.96 billion, 2.29 billion, and 2.61 billion yuan for 2025-2027, representing year-on-year growth of 20%, 17%, and 14% respectively. As of April 1, the market value corresponds to a PE ratio of 19 and 16 times for 2025 and 2026 [4] Financial Summary - In 2024, the company achieved total revenue of 14.1 billion yuan, a year-on-year increase of 9.1%, and a net profit attributable to shareholders of 1.63 billion yuan, up 17.1% year-on-year. The fourth quarter of 2024 saw revenue of 3.23 billion yuan, a 7.81% increase year-on-year, and a net profit of 362 million yuan, an 11.37% increase year-on-year [1][3] - Key financial indicators for 2023A to 2027E show total revenue growth from 12.93 billion yuan in 2023 to 21.09 billion yuan in 2027, with a compound annual growth rate (CAGR) of approximately 11.1%. Net profit attributable to shareholders is projected to grow from 1.39 billion yuan in 2023 to 2.61 billion yuan in 2027, with a CAGR of approximately 14% [3][4]

Investment Rating - The investment rating for the company is "Buy" [1] Core Views - The company maintains a leading position in the relay market, with a market share increase of 1.7 percentage points in 2024, ranking first globally. The high-voltage direct current relay market share is 40%, while the automotive relay market share has risen by 3.1 percentage points to 23.1%. In the power relay sector, the company has maintained its share with the State Grid at 57.1% [4] - The company has initiated the "75+" strategy, with positive momentum in the "5+" product development. In the low-voltage electrical sector, the company is integrating low-voltage electrical products with relays to create comprehensive solutions. Connector product shipments increased by 28% year-on-year in 2024, with exports to Vietnam and Turkey. Capacitor product shipments also grew by 14% year-on-year [4] - Profit forecasts indicate that the company's net profit attributable to shareholders is expected to be 1.96 billion, 2.29 billion, and 2.61 billion yuan for 2025-2027, representing year-on-year growth of 20%, 17%, and 14% respectively. As of April 1, the market value corresponds to a PE ratio of 19 and 16 times for 2025 and 2026 [4] Financial Summary - In 2024, the company achieved total revenue of 14.1 billion yuan, a year-on-year increase of 9.1%, and a net profit attributable to shareholders of 1.63 billion yuan, up 17.1% year-on-year. The fourth quarter of 2024 saw revenue of 3.23 billion yuan, a 7.81% increase year-on-year, and a net profit of 362 million yuan, up 11.37% year-on-year [1][3] - Key financial indicators for 2023A to 2027E show total revenue growth from 12.93 billion yuan in 2023 to 21.09 billion yuan in 2027, with a compound annual growth rate of approximately 11.1%. The net profit attributable to shareholders is projected to grow from 1.39 billion yuan in 2023 to 2.61 billion yuan in 2027, with a CAGR of 14% [3][5] - The company's gross margin is expected to remain stable around 36% over the forecast period, with ROE projected to be around 16.6% to 17.2% [3][5]

宏发科技股份有限公司 可转债转股结果暨股份变动公告 本公司董事会及全体董事保证本公告内容不存在任何虚假记载、误导性陈 述或者重大遗漏，并对其内容的真实性、准确性和完整性承担法律责任。 | 股票代码：600885 | 公司简称：宏发股份 | 公告编号：临 | 2025-021 | | --- | --- | --- | --- | | 转债代码：110082 | 转债简称：宏发转债 | | | 重要内容提示： ● 累计转股情况：宏发转债自 2022 年 5 月 5 日进入转股期，截至 2025 年 3 月 31 日，累计有 519,000 元宏发转债转换为公司普通股股票，累计转股数 8,285 股，占可转 债转股前公司已发行股份总额的 0.0011%。 ● 未转股可转债情况：截至 2025 年 3 月 31 日，尚未转股的可转债金额为 1,999,481,000 元，占可转债发行总量的 99.9741%。 ● 2025 年度第一季度转股情况：本季度可转债转股的金额为 6,000 元，因转股形成的 股份数量为 180 股。 一、可转债发行上市概况 宏发科技股份有限公司（以下简称"公司"）经中国证券监督管理委员会《 ...

Investment Rating - The report assigns a "Buy" rating for the company, marking the first coverage of the stock [6]. Core Views - The company has solidified its advantages in relays and is experiencing strong growth in multiple new product categories [4]. - The company reported a revenue of 14.102 billion yuan for 2024, reflecting a year-on-year growth of 9.07%, with a net profit of 1.631 billion yuan, up 17.09% year-on-year [3][8]. Summary by Sections Relay Product Performance - In 2024, the company's relay products generated revenue of 12.701 billion yuan, a year-on-year increase of 8.95%, with a gross margin of 37.99%, slightly down by 0.64 percentage points. The overall market share increased by 1.7 percentage points, maintaining the leading position globally [4]. - The company holds a 40% market share in high-voltage direct current relays, leading the market and gaining recognition from major global automotive clients [4]. - The market share for automotive relays has increased by 3.1 percentage points to 23.1%, driven by the demand from the new energy vehicle sector [4]. New Product Development - The company is expanding its "5+" product layout, with significant growth in various new product categories: 1. Low-voltage electrical appliances have seen integration with relay solutions, with successful qualifications from major clients [5]. 2. Connector shipments increased by 28%, expanding into communication and data center sectors [5]. 3. Capacitor shipments grew by 14%, with successful audits from major new energy clients [5]. 4. The company has developed over 30 new fuse products, achieving mass production and validation in various projects [5]. 5. Current sensor shipments exceeded 100 million yuan, marking an 81% year-on-year increase [5]. Financial Forecast - The company is projected to achieve revenues of 16.296 billion yuan, 18.843 billion yuan, and 21.805 billion yuan for 2025, 2026, and 2027 respectively, with corresponding EPS of 1.76 yuan, 2.07 yuan, and 2.43 yuan [6][8]. - The current stock price corresponds to a PE ratio of 20.9, 17.8, and 15.2 for the years 2025, 2026, and 2027 respectively, indicating a favorable valuation as the company benefits from increasing downstream demand and ongoing new product development [6].

Core Viewpoint - The report highlights the strong performance and growth potential of Hongfa Technology Co., Ltd. (宏发股份), emphasizing its leadership in the relay market and the robust growth of its diversified product lines, leading to a "buy" rating for the stock [1][5]. Financial Performance - In 2024, the company achieved a revenue of 14.102 billion yuan, representing a year-on-year growth of 9.07% - The net profit attributable to shareholders reached 1.631 billion yuan, up 17.09% year-on-year - The net profit after deducting non-recurring gains and losses was 1.515 billion yuan, an increase of 13.89% year-on-year [2]. Investment Highlights - The company’s relay products generated revenue of 12.701 billion yuan in 2024, with a year-on-year growth of 8.95% and a gross margin of 37.99%, slightly down by 0.64 percentage points - The overall market share increased by 1.7 percentage points, maintaining the global leading position - Specific segments include: - High-voltage direct current relays with a 40% market share - Automotive relays benefiting from the demand in the new energy vehicle sector, with a market share increase of 3.1 percentage points to 23.1% - Power relays maintaining a 57.1% market share - Signal relays expanding into new markets, increasing market share by 4.4 percentage points [3][4]. Product Development - The company is focusing on a "5+" product strategy, with significant growth in various new product categories: - Low-voltage electrical appliances with new production lines - Connectors with a 28% increase in shipment value - Capacitors with a 14% increase in shipment value - Fuses with over 30 new products developed - Current sensors with a shipment value exceeding 100 million yuan, growing by 81% [4]. Earnings Forecast - Projected revenues for 2025, 2026, and 2027 are 16.296 billion yuan, 18.843 billion yuan, and 21.805 billion yuan, respectively - Earnings per share (EPS) are forecasted to be 1.76 yuan, 2.07 yuan, and 2.43 yuan for the same years - The current stock price corresponds to price-to-earnings (PE) ratios of 20.9, 17.8, and 15.2 times for 2025, 2026, and 2027 [5].

Investment Rating - The report maintains a "Buy" rating for Hongfa Technology Co., Ltd. (600885) [1] Core Views - The company's Q4 profit slightly exceeded expectations, and strong demand growth is expected to accelerate this year [1] - Revenue for 2024 is projected to be 141.02 billion yuan, representing a year-on-year increase of 9.07% [1] - Net profit attributable to shareholders is forecasted to reach 1.63 billion yuan in 2024, with a year-on-year growth of 17.09% [1] - The company is expected to maintain a robust growth trajectory in the high-voltage direct current relay and automotive relay segments, with anticipated growth rates of 30% and 15% respectively for 2024 [8] - The implementation of the "75+" strategy and the rapid development of "5+" products are key initiatives for the company [8] - The target price is set at 47.5 yuan, based on a 25x PE for 2025, reflecting the company's global leadership position [8] Financial Projections - Total revenue is expected to grow from 12,930 million yuan in 2023 to 14,102 million yuan in 2024, with a projected CAGR of 9.07% [1][9] - Net profit is forecasted to increase from 1,393 million yuan in 2023 to 1,631 million yuan in 2024, with a year-on-year growth rate of 17.09% [1][9] - The latest diluted EPS is projected to be 1.56 yuan for 2024, increasing to 2.58 yuan by 2027 [1][9] - The company's P/E ratio is expected to decrease from 26.91 in 2023 to 22.98 in 2024, indicating improved valuation [1][9]

Investment Rating - The report maintains a "Recommended" rating for the company [4][6]. Core Views - The company achieved a revenue of 14.102 billion yuan in 2024, representing a year-on-year increase of 9.07%, and a net profit attributable to shareholders of 1.631 billion yuan, up 17.09% year-on-year [1]. - The company has solidified its leading position in the relay industry, with a market share increase of 1.7 percentage points, reaching the top globally [2]. - The company is actively developing new product categories under its "75+" strategy, achieving breakthroughs in multiple fields [3]. Financial Performance Summary - In 2024, the company reported a gross margin of 36.21%, a slight decrease of 0.68 percentage points year-on-year, while the net profit margin increased by 0.5 percentage points to 15.34% [1]. - The company’s revenue projections for 2025, 2026, and 2027 are 16.297 billion yuan, 18.784 billion yuan, and 21.755 billion yuan, respectively, with growth rates of 15.6%, 15.3%, and 15.8% [4][5]. - The net profit attributable to shareholders is expected to reach 1.898 billion yuan in 2025, 2.240 billion yuan in 2026, and 2.649 billion yuan in 2027, with growth rates of 16.3%, 18.0%, and 18.3% respectively [4][5]. Market Position and Product Development - The company’s relay segment generated 12.701 billion yuan in revenue, accounting for 90.1% of total revenue, with significant growth in high-voltage direct current relays and automotive relays [2]. - The company is expanding its new product categories, including low-voltage electrical appliances, film capacitors, connectors, current sensors, and fuses, with notable revenue growth in these areas [3].

Investment Rating - The report maintains a "Recommended" rating for the company [4][6]. Core Viewpoints - The company achieved a revenue of 14.102 billion yuan in 2024, representing a year-on-year increase of 9.07%, and a net profit attributable to shareholders of 1.631 billion yuan, up 17.09% year-on-year [1]. - The company has solidified its leading position in the relay industry, with a market share increase of 1.7 percentage points compared to 2023, ranking first globally [2]. - The company is actively developing new product categories under its "75+" strategy, achieving breakthroughs in various fields, including low-voltage electrical appliances and film capacitors [3]. Financial Performance Summary - In 2024, the company reported a gross margin of 36.21%, a slight decrease of 0.68 percentage points year-on-year, while the net profit margin increased by 0.5 percentage points to 15.34% [1]. - The company’s revenue projections for 2025, 2026, and 2027 are 16.297 billion yuan, 18.784 billion yuan, and 21.755 billion yuan, respectively, with growth rates of 15.6%, 15.3%, and 15.8% [4][5]. - The net profit attributable to shareholders is expected to reach 1.898 billion yuan in 2025, 2.240 billion yuan in 2026, and 2.649 billion yuan in 2027, with growth rates of 16.3%, 18.0%, and 18.3% respectively [4][5].