Wenzhou Yihua (002897) 国金证券·2024-08-23 00:30Investment Rating - The report assigns a "Buy" rating for the company, marking its first coverage [2][3]. Core Insights - The company specializes in connector and solar mounting bracket businesses, with significant growth expected in both sectors due to rising demand from major clients like Huawei and the expansion of the solar energy market [2][3]. - The company plans to raise funds through a stock issuance to enhance production capabilities and support growth initiatives [2][3]. Summary by Sections Business Overview - The company focuses on traditional and high-speed communication connectors, consumer electronics connectors, automotive electronic connectors, and solar mounting brackets [2][10]. - The company has established a strong client base, particularly with Huawei, which is expected to drive significant revenue growth [2][37]. Financial Projections - Revenue is projected to grow significantly, with estimates of CNY 70.63 billion (+39.6%), CNY 88.89 billion (+25.9%), and CNY 107.65 billion (+21.1%) for 2024-2026 [3][55]. - Net profit is expected to reach CNY 3.83 billion (+213.1%), CNY 5.20 billion (+35.9%), and CNY 6.29 billion (+21.0%) during the same period [3][55]. Connector Business - The communication connector segment is anticipated to benefit from the increasing demand for AI servers, with projected revenues of CNY 12.77 billion (+30%), CNY 16.60 billion (+30%), and CNY 21.58 billion (+30%) from 2024 to 2026 [2][53]. - The company’s connectors are crucial for data centers and telecommunications, with a significant market share in China [21][24]. Solar Mounting Bracket Business - The solar mounting bracket business is expected to accelerate performance, with projected revenues of CNY 43.91 billion (+40%), CNY 56.21 billion (+28%), and CNY 67.45 billion (+20%) from 2024 to 2026 [2][53]. - The company has established multiple subsidiaries in the U.S. to cater to local demand, which is expected to mitigate potential tariff impacts [2][40]. Market Trends - The global connector market is projected to exceed USD 100 billion by 2024, with China being the largest market [17][21]. - The solar industry is experiencing rapid growth, with expectations of significant increases in installed capacity globally [29][30]. Competitive Position - The company has a competitive edge due to its established relationships with major clients and its ability to innovate in product development [2][37]. - The company’s focus on high-precision mold development enhances its production capabilities and product quality [45][46].