Investment Rating - The report assigns a positive investment rating to the company, indicating a favorable outlook for its future performance. Core Insights - The company has successfully entered the supply chains of major players such as N Company, Meta, and Sony, benefiting from high gross margins in its gaming components business. The gross margin for the company's main business has consistently outperformed comparable companies in the industry [5][6][15]. Summary by Sections Company Overview - The company specializes in the design, research and development, production, and sales of electronic connectors, which are a significant part of its main business. It has established a wholly-owned subsidiary in Hong Kong to facilitate overseas sales and customer interactions [2]. Financial Performance - From 2019 to Q1 2024, the company's sales gross margins were 22.75%, 29.69%, 29.84%, 36.03%, 34.58%, and 38.24%, respectively, consistently higher than the industry average [6]. The company has a strong competitive advantage in the gaming components sector, with no direct competitors in mainland China [6]. Product Development and R&D - The company has seen a steady increase in R&D expenses, which were 22.47 million, 27.84 million, 30.28 million, and 35.00 million from 2020 to 2023, representing a growing commitment to innovation [17]. The R&D expense as a percentage of revenue has also increased, indicating a focus on enhancing product offerings [17]. Market Position and Client Dependency - The company relies heavily on Foxconn, which accounts for over 50% of its revenue. However, this dependency does not pose a significant risk to its operational stability due to Foxconn's strong market position and the company's compliance with client certification standards [15][16]. Product Categories and Sales - The company’s product categories include gaming machine components and connectors, with a notable focus on high-margin products such as sliders and connectors for gaming consoles [10][39]. The sales of these products have shown a strong correlation with the sales of major gaming consoles, indicating a robust market demand [46][72]. Future Growth Potential - The upcoming releases of new gaming consoles and the expected peak sales for existing models are anticipated to drive continued demand for the company's products, suggesting a positive growth trajectory [73]. The company is well-positioned to capitalize on the expanding gaming market, which is projected to grow significantly in the coming years [23][52].
致尚科技：游戏零部件为主体，XR/光通讯两翼共促发展