Wuxi Zhenhua(605319) EBSCN·2025-01-21 01:15Investment Rating - The report maintains a "Buy" rating for the company, with an updated target price of 29.43 yuan, corresponding to a 16x PE for 2025E [4][6]. Core Views - The company is expected to achieve a significant year-on-year growth in net profit for 2024, projected to increase by 37.07%-50.05% to 380-416 million yuan, driven by strong sales performance of Xiaomi's models and a notable decrease in raw material prices [1][2]. - The company is enhancing its production capacity in stamping and expanding its electroplating business, which is expected to further strengthen customer loyalty and profitability [3][4]. Summary by Sections Financial Performance - The company forecasts a net profit of 392 million yuan for 2024, with a growth rate of 41.56% compared to 2023. The projected net profits for 2025 and 2026 are 461 million yuan and 522 million yuan, respectively [5][9]. - Revenue is expected to grow from 2,699 million yuan in 2024 to 3,275 million yuan in 2025, reflecting a growth rate of 21.32% [5][9]. Business Development - Xiaomi has become one of the company's top five clients, contributing 8.16% to revenue in the first half of 2024. The company plans to enhance its production capabilities through a convertible bond issuance, with 4.2 billion yuan allocated to automotive parts projects [2][3]. - The stamping business is expanding with investments in multiple locations, while the electroplating segment is benefiting from the rapid growth of hybrid vehicle sales, which are projected to increase by 77% in 2024 [3][4]. Valuation Metrics - The report projects an increase in EPS from 1.57 yuan in 2024 to 1.84 yuan in 2025, with a corresponding decrease in P/E ratio from 15 in 2024 to 13 in 2025 [5][12]. - The company's ROE is expected to remain strong, with estimates of 15.81% for 2024 and 16.30% for 2025 [11][12].