FRD(300602) 中银证券·2024-03-18 16:00Investment Rating - The report assigns a "Buy" rating to the company, with an initial coverage date of March 19, 2024 [1]. Core Views - The company is a leading provider of electromagnetic shielding and thermal management materials, with a strong presence in both domestic and international markets, collaborating closely with major clients such as Huawei and ZTE. The demand for thermal management solutions is expected to grow significantly in the AI era, providing new growth opportunities for the company [4][10]. - The company has a robust product matrix and a strong focus on R&D, which helps to build a competitive moat and deepen its industry presence. The partnership with Huawei since 1997 has been pivotal in driving growth in various sectors, including mobile devices and servers [4][8][58]. - The financial outlook is positive, with projected revenues of RMB 4.3 billion, RMB 6.05 billion, and RMB 7.27 billion for 2023, 2024, and 2025 respectively, alongside net profits of RMB 121 million, RMB 403 million, and RMB 579 million for the same years [4][15]. Summary by Sections Company Overview - The company was established in 1993 and specializes in the R&D, production, and sales of electromagnetic shielding materials, thermal management materials, and related devices. Its products are widely used in mobile terminals, communication devices, computers, automotive electronics, and home appliances [4][28]. Market Position and Growth Drivers - The company is positioned as a leading service provider in the domestic electromagnetic shielding and thermal management solutions market. The growth in data communication and consumer electronics, driven by AI advancements, is expected to enhance the company's market opportunities [4][18]. - The renewable energy sector is also a significant growth area, with China's photovoltaic capacity increasing by 148.12% year-on-year in 2023, and new energy vehicle sales growing by 37.87% [4][13]. Financial Performance - The company has shown a consistent revenue growth trend since its listing in 2017, with a notable increase in total revenue in 2022, which reached RMB 4.125 billion, a 34.88% increase from 2021. The first three quarters of 2023 saw revenues of RMB 29.12 billion, reflecting a year-on-year growth of 4.10% [30][37]. - The net profit has rebounded significantly, with a projected net profit of RMB 0.96 billion in 2022, up 220% from the previous year, and a continued upward trend expected in 2023 [37][40]. R&D and Innovation - The company has been investing heavily in R&D, with expenses rising from RMB 0.52 billion in 2017 to RMB 2.49 billion in 2022. The R&D expense ratio has remained stable, indicating a commitment to innovation and product development [43][44]. - The focus on new technologies and product lines, particularly in the 5G and AI sectors, is expected to enhance the company's competitive edge and profitability [44][58].