ECT(SZ:300679) Great Wall Securities·2024-05-27 05:02Investment Rating - The report assigns a "Buy" rating to the company, expecting a stock price increase of over 15% relative to the industry index within the next six months [26]. Core Views - The company has shown strong performance in Q1 2024, driven by significant growth in automotive connectors and a recovery in consumer electronics demand [15][19]. - The company is positioned as a key supplier for major smartphone brands and has successfully entered the supply chains of leading automotive manufacturers, indicating robust growth potential in both sectors [5][19]. - The financial outlook is positive, with projected net profits increasing significantly over the next few years, reflecting strong demand in both automotive and consumer electronics markets [19]. Financial Performance Summary - In 2023, the company achieved revenue of 3.129 billion yuan, a year-on-year increase of 5.37%, while net profit decreased by 19.64% to 356 million yuan. However, the adjusted net profit increased by 19.66% to 348 million yuan [2]. - For Q1 2024, the company reported revenue of 1.04 billion yuan, a year-on-year increase of 68.77%, and a net profit of 162 million yuan, up 244.43% year-on-year [2][15]. - The company's gross margin improved to 35.31% in Q1 2024, reflecting a 3.58 percentage point increase year-on-year, driven by higher sales of high-margin automotive connectors [15]. Product and Market Insights - The company has entered the supply chains of major smartphone brands such as Xiaomi, OPPO, and Huawei, which is expected to support steady growth in its consumer electronics business [5][19]. - The automotive connector segment is experiencing high growth, with the company successfully supplying to leading domestic automotive manufacturers like Geely and BYD, indicating a strong market position [16][19]. - The demand for high-frequency and high-speed automotive connectors is anticipated to rise due to increasing penetration rates of smart driving technologies [18][19].