LY iTECH(SZ:002600)2024-03-28 16:00Investment Rating - The report initiates coverage on Lingyi iTech with a "Buy" rating, predicting revenue of 37.3/44.1/53.3 billion yuan for 2023-2025 and net profit of 2.2/2.5/3.3 billion yuan [8][10] - The current market value corresponds to a 2024 PE of 16x, with an 18% upside potential compared to the average PE of 18x for comparable companies [8][10] Core Views - Lingyi iTech is a leading precision manufacturing platform with diversified downstream applications, including consumer electronics, automotive, and photovoltaic energy storage [7] - The company has a strong presence in the consumer electronics sector, with a 7.2% global market share in 2020, and is well-positioned to benefit from the recovery of the smartphone market and the growth of emerging hardware such as XR, AI, and robotics [7][33] - Lingyi iTech is expanding into the automotive and photovoltaic energy storage sectors, with significant growth potential in these areas [7][43] Business Overview - Lingyi iTech has a diversified business portfolio, with consumer electronics accounting for 70% of revenue, followed by automotive and photovoltaic energy storage [11] - The company has a strong presence in the consumer electronics sector, providing precision functional parts, structural parts, modules, and assembly services for smartphones, laptops, and wearable devices [27] - Lingyi iTech is expanding into the automotive sector, with a focus on battery structural parts, and has established partnerships with leading automakers such as Tesla and Mercedes-Benz [18][46] - The company is also developing its photovoltaic energy storage business, providing micro-inverter products and collaborating with leading clean energy clients [18][48] Financial Performance - Lingyi iTech's revenue grew from 28.1 billion yuan in 2020 to 34.5 billion yuan in 2022, with net profit increasing from 2.3 billion yuan to 1.6 billion yuan over the same period [21] - The company's gross margin and net margin have been improving, with a gross margin of 21% and a net margin of 8% in Q3 2023 [24] - Lingyi iTech's financial performance is expected to improve further, with revenue and net profit forecasted to grow at a CAGR of 18.3% and 33.5%, respectively, from 2023 to 2025 [9][10] Industry Trends - The global smartphone market is recovering, with Q3 and Q4 2023 shipments increasing by 0.33% and 7.82%, respectively, after eight consecutive quarters of decline [29][30] - The XR industry is expected to grow significantly, driven by the launch of Apple's Vision Pro and other VR products, with Lingyi iTech supplying key components such as thermal modules and headbands [36] - The global new energy vehicle market is growing rapidly, with sales expected to exceed 50 million units by 2030, driving demand for battery structural parts [43][44] - The photovoltaic energy storage market is also expanding, with global new installations reaching 390GW in 2023, a 69.6% increase year-on-year [47]