Huaqin Technology (SH:603296) Huafu Securities·2024-03-20 16:00Investment Rating - The report assigns a "Buy" rating for the company, with a target price of 91.21 CNY based on a 22x PE for 2024 [6][11]. Core Viewpoints - The company has transformed from a mobile IDH business to a leading global ODM enterprise, expanding its product categories from feature phones to smartphones, tablets, laptops, smart wearables, and AIoT products [2][17]. - The rise of AI technology is expected to drive significant growth in the consumer electronics sector, with a notable recovery in the PC market and robust development in data centers and automotive electronics [3][4]. - The ODM industry is increasingly focusing on leading players, with the company leveraging its strong product quality, R&D capabilities, and efficient operations to capture market share [4][10]. Summary by Sections Company Overview - Established in 2005, the company has evolved from an IDH model to a comprehensive ODM model, now offering a wide range of smart hardware products [17][18]. - The company has established stable partnerships with major global brands such as Samsung, OPPO, and Xiaomi, achieving over 200 million units shipped in 2021, ranking first in the global smart hardware ODM/IDH industry [2][17]. Market Trends - The ODM model is becoming the manufacturing trend in the smartphone industry, with an expected increase in penetration rates from 37% in 2023 to 40% in 2025 [9][10]. - The global smartphone ODM market is projected to grow, with the company maintaining a market share of 28% in the smartphone sector [9][10]. Financial Performance - The company’s revenue is forecasted to grow from 85.13 billion CNY in 2023 to 112.09 billion CNY in 2025, with corresponding net profits of 2.68 billion CNY and 3.42 billion CNY respectively [5][6]. - The company’s PE ratios are projected to decrease from 20.6 in 2023 to 16.2 in 2025, indicating potential for valuation improvement [5][6]. Investment Thesis - The company is expected to benefit from the increasing adoption of the ODM model, the expansion of its product portfolio, and the growth of its non-mobile business segments, which will enhance its long-term growth prospects [10][11]. - The anticipated recovery in the consumer electronics market, driven by AI advancements and new product launches, is expected to further support the company's growth trajectory [3][11].