Shenzhen Honor Electronic (SZ:300870) Xinda Securities·2024-03-29 16:00Investment Rating - The report assigns a "Buy" rating for the company, 欧陆通 (300870) [6]. Core Insights - The company is positioned to benefit significantly from the growth of AI servers, driven by increasing power and cooling requirements, and is one of the few domestic manufacturers capable of mass-producing high-power server power supplies [6][19]. - The domestic server power supply market is undergoing a shift towards localization, with the company being a leading player in this transition [50]. - The recovery in demand for power adapters in consumer electronics is expected to contribute positively to the company's growth [19]. Summary by Sections 1. Core Logic - The company has a long-standing focus on the switch power supply sector, with a significant increase in R&D investment following an equity incentive in 2021. In 2023, it achieved breakthroughs in high-power server power supplies [6][19]. - The growth potential is attributed to the rapid development of AI servers, the objective need for localization in server components, and the anticipated recovery in demand for power adapters [19]. 2. Server Power Supply: Domestic Replacement in Progress - The global data volume is rapidly increasing, driving the demand for computing power. The server power supply sector is seeing a trend towards localization, with domestic manufacturers like the company poised to benefit [20][50]. - The market for servers is expected to grow significantly, with the company positioned as a leader in the domestic market [25][36]. 3. AI Server Development and Benefits to the Company - The AI server market is experiencing high growth, with the company expected to benefit from this trend due to its capabilities in producing high-power server power supplies [3][56]. - The report highlights the differences between AI servers and traditional servers, emphasizing the need for specialized designs to accommodate the unique requirements of AI workloads [41][51]. 4. Profit Forecast and Valuation - Revenue projections for the company are set at 29.70 billion, 36.80 billion, and 45.67 billion yuan for 2023, 2024, and 2025 respectively, with year-on-year growth rates of 9.9%, 23.9%, and 24.1% [2][6]. - The net profit attributable to the parent company is forecasted to be 1.98 billion, 2.28 billion, and 3.12 billion yuan for the same years, with significant growth rates of 119.5%, 15.1%, and 36.9% [2][6].