Current investment tips:
Fundamentals: Hongxi technology has long focused on the field of pen and wire harness, and its core products are bound with downstream leaders, and the market share of single products is in the forefront.
Taking high-precision electronic wire components with high customization requirements and high added value as the direction of deep cultivation, the company cut into the supply chain system of industry leading customers earlier and grew together with them. In recent years, the company has steadily contributed more than 80% of its revenue and accounted for 20% of the shipments in the field of notebook computers; In 2018, the micro speaker business was newly introduced to realize the rapid growth of revenue scale through the accumulation of manufacturing process and sharing advantages with channels. This raising and investment plan will add more than twice the production capacity, which will be a useful supplement to the future revenue increment.
The company is steady and steady, accumulating high-quality & stable customer resources. The direct customers of the company are main contract manufacturers such as Renbao, Yingyeda, Guangda and Lianbao, and have been recognized by first-class brands of terminals such as HP, Lenovo, Dell, ASUS and Acer; Key customers cooperate with “back feeding” R & D and manufacturing. The yield of the company’s products is at a high level in the industry. During the reporting period, the yield of the company’s high-precision electronic wire components / micro speakers was more than 98% / 95%.
Issuance plan: this new share issuance adopts direct pricing, strategic placement and over placement. The subscription date is February 15, 2022, and the subscription code is “889777”. The initial issuance scale is 16 million shares, accounting for 21.62% of the total share capital of the company after the issuance (before the exercise of over allocation). It is expected to raise 192 million yuan, and the total market value of the company after the issuance is 888 million. The issuing price of new shares was 12 yuan / share, 140% higher than the base price, and the issuing PE (TTM) was 21.87x, higher than the main issuing range of new shares in the early stage. The amount of online top grid subscription is 760000 shares, and the capital needs to be frozen is 9.12 million yuan. A total of 9 war investors have been introduced offline, including 2 public offerings, 2 securities companies and 5 private placements.
Calculation of the winning rate: the high issuance P / E ratio urges investors to increase their consideration of the company’s performance expectation and capital cost, and their enthusiasm may cool down. It is assumed that the proportion of the number of effective subscription households is 6% – 8%, which is slightly lower than that of Hujiang materials; Since there are still three new shares to be issued after the beginning of the year, investors may allocate funds in advance. Assuming that the frozen funds are lower than that in the early stage, the average frozen scale is 200000. Based on the issuing scale and price of new shares, the winning rate is expected to be 0.202% – 0.269%.
Industry situation: the company is located in the midstream of the industrial chain. Due to the short life cycle and fast renewal of consumer electronics products in the downstream main track, the customer response speed and customization ability are the key to the midstream competition. Downstream consumer electronics demand is extensive, and 5g + AI accelerates product innovation and value enhancement. If only the demand for notebook computers is considered, it is expected that the respective market capacity of the company’s two major products will be at least 290 million (pairs) in 2025. In addition, under the background of downstream leading concentration and high-end products, the leading advantages in subdivided fields are expected to be strengthened. On the one hand, the market share of the top six notebook computer manufacturers in the world increased in 18-20 years, driving the concentration of midstream orders; On the other hand, new technologies include the popularization of high refresh rate screens, the improvement of heat dissipation technology, the maturity of flexible panel technology and the landing of wifi-6 to improve the added value of products, promote the development of new products, and help enterprises strengthen customer stickiness through joint research and development.
Subscription suggestions: it is recommended to participate carefully. The PE (TTM) of this IPO is higher than the median value of IPO since the establishment of the Beijing stock exchange. Combined with the recent downward trend of secondary market valuation, the valuation cost performance advantage of this IPO has subsided. From the comparable listed companies disclosed by the company, Luxshare Precision Industry Co.Ltd(002475) (002475. SZ) has a perfect product layout. The performance increment in the past two years mainly comes from the consumer electronics sector represented by mobile phones. However, the company is comparable in terms of laptop components. It is suggested to observe the company’s reasonable valuation range in combination with downstream prosperity and performance growth.
Risk factors. 1) Customer concentration risk; 2) Price fluctuation of raw materials; 3) Exchange rate fluctuation risk; 4) Operating risks of subsidiaries.
