TORCH ELECTRON(603678) Huaxin Securities·2025-05-07 08:23Investment Rating - The report assigns a "Buy" rating for the company, marking its first coverage [8]. Core Insights - Capacitor sales are experiencing growth against the trend, with a gradual recovery in downstream demand. Despite a decline in overall performance due to a prolonged industry downturn in 2024, key products such as pulse capacitors, tantalum capacitors, and supercapacitors have shown resilient sales growth. The company's profit primarily comes from the components segment, where specialized electronic components face high entry barriers and stable competition [4]. - The company has become one of the first to pass aerospace-grade MLCC certification, establishing strong partnerships in both military and civilian markets. The multilayer ceramic capacitors (MLCC) are widely used in various fields, including aerospace, medical electronics, and industrial control [5]. - The development of specialized high-performance new materials presents significant opportunities, particularly in aerospace applications. These materials, which have high-temperature resistance and low density, are crucial for manufacturing ceramic matrix composites (CMC) used in defense and energy sectors [6][7]. Financial Summary - The company reported a revenue of 762 million yuan in Q1 2025, representing a year-on-year increase of 16.96% and a quarter-on-quarter increase of 17.19%. The net profit attributable to shareholders was 107 million yuan, up 43.60% year-on-year and 439.25% quarter-on-quarter, indicating a clear recovery in industry conditions [3][4]. - Revenue projections for 2025-2027 are estimated at 3.928 billion, 4.893 billion, and 6.201 billion yuan, respectively, with corresponding EPS of 1.01, 1.31, and 1.72 yuan. The current stock price corresponds to PE ratios of 38, 29, and 22 times for the respective years [8][10].