TORCH ELECTRON(SH:603678) Minsheng Securities·2024-08-19 15:00Investment Rating - The report maintains a "Recommended" rating for the company, indicating a positive outlook based on its industry position and growth potential in new business areas [1][3]. Core Views - The company reported a revenue of 1.427 billion yuan for the first half of 2024, a year-over-year decline of 9.6%, with a net profit attributable to shareholders of 164 million yuan, down 35.2% year-over-year. The performance aligns with market expectations, influenced by fluctuations in industry demand and price adjustments to maintain market share [1]. - The company has shown a clear trend of improvement in net profit over the last two quarters, with a significant quarter-on-quarter increase of 21.1% in Q2 2024, following a 182.0% increase in Q1 2024 [1]. - The company is a leading player in the special MLCC market and is expanding its core competencies in active power devices, with ceramic-based composite materials expected to open new growth avenues [1]. Financial Summary - For 2024, the company is projected to achieve a revenue of 4.054 billion yuan, representing a growth rate of 15.7% compared to 2023. The net profit attributable to shareholders is expected to be 375 million yuan, reflecting a growth rate of 17.9% [2][4]. - The company’s gross margin for the first half of 2024 decreased by 6.4 percentage points to 32.9%, while the net margin fell by 5.4 percentage points to 11.1% [1]. - The company has increased its R&D investment, with R&D expenses amounting to 50.979 million yuan in the first half of 2024, accounting for 8.41% of its main business revenue [1]. Product and Market Performance - The company’s self-produced components business generated revenue of 540 million yuan in the first half of 2024, down 17.36% year-over-year, while its international trade business achieved revenue of 810 million yuan, a decline of 3.40% year-over-year [1]. - The company’s subsidiaries, such as Fujian Millimeter and Tianji Technology, have made significant business breakthroughs, with Fujian Millimeter's self-produced business revenue increasing by 16% year-over-year [1]. Future Outlook - The company is expected to see net profits of 3.75 billion yuan, 4.38 billion yuan, and 5.05 billion yuan from 2024 to 2026, with corresponding price-to-earnings ratios of 29x, 25x, and 22x [1][2].