Investment Rating - The investment rating for the company is "Buy" (首次) [4] Core Views - The company is one of the only three domestic manufacturers capable of mass-producing 56Gbps backplane connectors and has developed products with 112G/224G speeds, gradually closing the gap with foreign leading products [2][8] - With the reduction of foreign patent barriers and the context of self-control, the company is expected to accelerate the replacement of backplane connectors [6][8] - The demand for high-speed connector modules is expected to surge due to AI server clusters, and the company has already received orders for high-speed line modules based on backplane connectors, positioning it to achieve scale production ahead of competitors [6][10] - Strategic partnerships with Huawei in the automotive sector may lead to breakthroughs in automotive business, opening up greater growth potential [2][8] Summary by Sections 1. Leading Optoelectronic Connector and Interconnection Solution Provider - The company has over 60 years of experience in the connector industry, focusing on R&D, production, and sales of optical/electrical connectors and cable assemblies [14] - It has a strategic layout of "one body and two wings," with defense as the core and communication and industrial products as complementary [14][19] - The company has established a strong customer base, including major clients like China Weapons, China Aerospace, Huawei, and BYD [6][14] 2. Growth from Backplane Connectors to Line Modules - The domestic market for backplane connectors is expected to grow significantly, with projected revenues of 3.9 billion, 5.0 billion, and 6.5 billion yuan from 2024 to 2026, respectively, reflecting a CAGR of 26% [6][10] - The rise of AI applications is driving demand for high-speed backplane connectors, with NVIDIA leading the way in system architecture upgrades [6][10] 3. First-Mover Advantage and Anticipated Demand - The company is expected to benefit from the rising demand for high-speed line modules, having already made breakthroughs with key customers [6][10] - The reduction of foreign patent barriers is likely to accelerate the domestic replacement of backplane connectors [6][10] 4. Defense Market Recovery and New Automotive Products - The defense market is anticipated to recover, which may boost the company's main business revenue [10][11] - The automotive high-voltage connector market is expected to become a new growth point for the company [10][11] 5. Profit Forecast, Valuation, and Investment Recommendations - Projected revenues for 2024-2026 are 1.331 billion, 1.910 billion, and 2.579 billion yuan, with corresponding net profits of 101 million, 149 million, and 210 million yuan [10][11] - The company is expected to maintain high growth potential due to its advantages in backplane connectors and ongoing expansion into automotive high-voltage/high-frequency connectors [10][11]
华丰科技：线模组应用兴起，有望迎快速成长