Lixun Precision (002475): Strengthening Intelligent Manufacturing Capabilities, Forced System Assembly Market

Lixun Precision (002475): Strengthening Intelligent Manufacturing Capabilities, Forced System Assembly Market
The company’s recent situation On April 26th, we participated in the Luxun Precision Performance Exchange Meeting in Kunshan to communicate with the chairman and core leaders on the company’s operating status and future strategies. We recognize the company’s efforts and prospects for vertical integration of components, modules, and systems, and there is still plenty of room for growth in the future; we also see that the company’s efforts in intelligent manufacturing and optimized operations will 深圳桑拿网 further enhance core competitiveness and financial performance, and maintain recommendations. The review advocates intelligent manufacturing to optimize operational efficiency.After the rapid expansion in 2015-17, the company began to increase the supervision of cost control and optimization of operating efficiency in 2018, and achieved good returns, profit margins, turnover rate, ROE significantly improved.Looking forward to the future, the company will adjust to the path of network-digital integration-intelligent decision-making from 2019-2021 to achieve the transition from traditional manufacturing to intelligent manufacturing to reduce costs and improve profitability. It is planned to reduce the overall gross profit margin from about 2021.21% in 18 years increased to 22.Gradually, continue to optimize operating efficiency, improve receivables, inventory and fixed asset turnover, reduce indirect labor costs by 20-30%, and increase ROA and ROE to 12% / 25% around 2021. Consumer electronics: vertical integration of components, modules, power system assembly.In the field of consumer electronics, Luxun has become one of the most representative component and module companies, but the vertically integrated parts are still less than 30%, and there is still room for the future.At the same time, Luxun started to work on system assembly. In addition to TWS headsets, smart watches, smart speakers, and biological monitoring devices are also expected to gradually cut into parts and assemble, becoming an important growth driver in the next 3-5 years.Luxun has also strengthened the exchange capabilities of die, stamping, forming, SMT / Sip, automation, etc. In the past year, 128 SMT production lines have been established in the Kunshan factory, becoming the largest SMT factory in East China, and began to extend to Sip.Will be an important support for future modules, OEM / ODM. Communication, cars are going well.The company is very optimistic about the increase in transmission requirements brought by 5G and edge computing, and has established solutions for wireless radio frequency, wired (high-speed connectors / connecting lines), and optical modules in transmission switching.Batch injection, high-speed cable / connector technology exceeds Tyco, Amphenol, Molex.In terms of automobiles, the supply capacity of Luxon + BCS is gradually recognized by customers, and it faces a market space of 10 billion US dollars. Estimates suggest that we maintain 19 / 20e EPS 0.96/1.28 yuan.The company’s current consensus corresponds to 27/27.1x P / E, maintaining recommendation, considering the company’s future potential in the field of system assembly, we raise the company’s target price by 7% to 32.00 yuan, corresponding to 19 years 33.3x P / E, still about 23% upside currently. Risks The volume of smartphones is less than expected; 5G implementation is less than expected.