Investment Rating - The report assigns a "Buy" rating for the company with a target price of HKD 32.50, based on a current price of HKD 25.60 [1][3]. Core Insights - The company has shown signs of an operational improvement with a notable performance turnaround in the second half of 2023, driven by various business segments [2][8]. - The expected compound annual growth rate (CAGR) for the company's net profit from 2024 to 2026 is projected at 40.6%, justifying the valuation of 25 times PE for 2024 [3][25]. Summary by Sections Financial Performance - In 2023, the company reported revenue of RMB 20.42 billion, a decrease of 1% year-on-year, with a gross margin of 16.9%, down 1.4 percentage points. The net profit was RMB 740 million, a decline of 9.9% [2][8]. - The second half of 2023 saw revenue of RMB 11.2 billion, remaining stable year-on-year, with a gross margin of 19.2%, an increase of 1.4 percentage points, and a net profit of RMB 590 million, up 25.2% [2][8]. Business Segments - Acoustic Business: Revenue was RMB 7.5 billion, down 15.4% year-on-year, but showed a 25.7% increase in the second half. The average selling price (ASP) improved by 10% due to smartphone specifications upgrades [2][3]. - Optical Business: Revenue increased by 12.7% year-on-year to RMB 3.63 billion, with a significant 36% growth in the second half. The gross margin improved by 20.5 percentage points year-on-year [2][16]. - Electromagnetic Transmission and Precision Components: Revenue grew by 13.3% year-on-year to RMB 8.25 billion, benefiting from increased demand for high-end smartphones [2][19]. - Sensors and Semiconductors: Revenue was RMB 1.03 billion, down 18.4% year-on-year, but the segment is expected to benefit from AI-driven upgrades in MEMS microphones [3][22]. Strategic Developments - The acquisition of 80% of Premium Sound Solutions (PSS) in February 2024 is expected to enhance the company's capabilities in the automotive audio market, leveraging PSS's established presence and technology [13][15]. - The company is focusing on high-end optical products, with significant increases in the shipment of advanced lens types, indicating a shift towards higher-value offerings [16][22]. Market Outlook - The global smartphone market is showing signs of recovery, with a projected increase in demand for mid-to-high-end devices, which is expected to positively impact the company's revenue streams [8][19]. - The report anticipates that the company's diversified product offerings and strategic acquisitions will position it well for future growth in various sectors, including automotive and consumer electronics [15][25].
多项业务经营改善，业绩拐点已现