YOFC(SH:601869) Guotai Junan Securities·2024-05-08 01:32Investment Rating - The report maintains a "Buy" rating for the company, with a target price adjusted to 34.50 CNY from the previous 37.60 CNY [2][6]. Core Views - The company's performance in Q1 2024 was below market expectations, leading to a downward revision of profit forecasts for 2024-2026. The revised net profits are projected at 441 million CNY, 873 million CNY, and 1,175 million CNY respectively, reflecting significant decreases of 65.7%, 38.8%, and 26.4% compared to previous estimates [3][8]. - The decline in revenue and profit is attributed to a more than 20% drop in procurement volume from China Mobile for optical cables in 2023, along with a slowdown in delivery pace starting from the second half of 2023 [3][4]. - The acquisition of RFS, a company engaged in wireless communication equipment, is seen as a strategic move to expand into the international cable market, enhancing overseas production capacity [3][4]. Financial Summary - Revenue for 2022 was 13,830 million CNY, with a forecasted decline to 11,102 million CNY in 2024, followed by a recovery to 15,318 million CNY by 2026 [1]. - Operating profit (EBIT) is expected to decrease from 1,153 million CNY in 2022 to 614 million CNY in 2024, before rising to 1,379 million CNY in 2026 [1]. - Net profit attributable to shareholders is projected to drop significantly to 441 million CNY in 2024, with a recovery to 1,175 million CNY by 2026 [1]. Profitability and Valuation Metrics - The operating margin is expected to decline from 8.3% in 2022 to 5.5% in 2024, with a recovery to 9.0% by 2026 [1]. - The price-to-earnings (P/E) ratio is projected to be 46.24 in 2024, decreasing to 17.34 by 2026 [1][11]. - The dividend per share is expected to be 0.17 CNY in 2024, increasing to 0.47 CNY by 2026 [1].