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● Yangtze Business Daily reporter Shen Yourong

Yangtze Business Daily NewsAs the market rebounded, Darui Electronics (300976.SZ) achieved significant growth in operating performance.

On the evening of July 28, Darui Electronics released its performance forecast, and the company expects to achieve a net profit attributable to parent company shareholders (hereinafter referred to as "net profit") of 93 million to 111 million yuan in the first half of this year, a year-on-year increase of more than 4 times.

The company explained that the increase in orders for its consumer electronics and new energy businesses, coupled with internal cost control, saved costs and led to growth in performance.

Darui Electronics is mainly engaged in the research and development, production and sales of structural and functional devices, covering two major areas: consumer electronics and new energy. Since the beginning of this year, the consumer electronics market has shown signs of recovery, and some consumer electronics companies have recovered.

Darui Electronics' ability to seize the opportunity of market recovery is directly related to its strong market competitiveness. According to disclosures, the company has advantages such as advantageous customer resources, innovative R&D and intelligent manufacturing, lean management and cost control. In terms of customers, the company has established long-term cooperative relationships with well-known consumer electronics core component manufacturers and manufacturing service providers in the industry, such as Samsung Vision, Goertek, and Luxshare Precision. It also cooperates with new energy companies such as CATL and Envision Power.

Influenced by the significant growth in performance, on July 29, Darui Electronics’ stock price hit the daily limit.

Net profit increased significantly and the stock price rose to the daily limit

Darui Electronics' operating performance is improving and its stock price has risen to the daily limit.

On the morning of July 29, Darui Electronics opened at 47.47 yuan per share, up 11.54%. Eight minutes after opening, the stock price hit the daily limit, up 19.99%, and closed at 49.04 yuan per share.

On that day, Darui Electronics' trading volume exceeded 200 million yuan, a significant increase compared to the previous trading day's trading volume of 29.2874 million yuan.

What supports the surge in stock prices is the operating performance, and the company's performance is improving.

According to the performance forecast, in the first half of this year, the company expects to achieve a net profit of 93 million yuan to 111 million yuan, which will increase by 429.76% to 532.29% compared with the net profit of 17.5551 million yuan in the same period last year; it is expected to achieve a net profit of 78 million yuan to 96 million yuan after deducting non-recurring gains and losses (hereinafter referred to as "net profit after deducting non-recurring gains and losses"), and the net profit after deducting non-recurring gains and losses in the same period last year was 7.6274 million yuan, an increase of 922.63% to 1158.62% year-on-year.

In the first quarter of this year, the company achieved operating income of 453 million yuan, a year-on-year increase of 65.24%. The net profit and non-net profit were 31.0357 million yuan and 25.6935 million yuan respectively, with year-on-year growth rates of 1131.75% and 848.23%.

A comparison shows that the net profit and non-net profit in the second quarter have increased significantly compared with the first quarter.

Regarding the substantial growth in operating performance in the first half of this year, Darui Electronics explained that it was mainly due to two reasons. First, the company's consumer electronics business and new energy business orders increased compared with the same period last year, and operating income increased year-on-year. Second, the company saved management costs through internal management optimization and detailed cost control, which had a certain impact on performance improvement.

Darui Electronics' business covers two major areas: consumer electronics and new energy. In the field of consumer electronics, the company mainly develops, produces and sells functional devices, structural devices (customized component products), etc. Downstream application terminals include smartphones, laptops, tablets, wearable devices (smart watches, virtual reality VR/augmented reality AR), smart audio/entertainment equipment (headphones, game consoles) and smart home products.

According to statistics from the International Data Corporation (IDC), affected by macroeconomic challenges and increased inventory at the beginning of the year, global smartphone shipments will drop 3.2% year-on-year to 1.17 billion units in 2023, and annual shipments will hit a 10-year low. According to data released by Canalys, global PC shipments will total 247 million units in 2023, a year-on-year decrease of 13%.

Affected by this market environment, the operations of companies in the consumer electronics industry were under pressure, and it was inevitable that companies in the industry such as Darui Electronics would face pressure on their performance that year.

Industry insiders said that in the fourth quarter of 2023, global smartphone shipments increased by 8.5% year-on-year to 326 million units, and global notebook computer shipments increased by 4% year-on-year to 51.6 million units. These positive data laid the foundation for the recovery expectations in 2024. This is also the main reason for the performance growth of companies such as Darui Electronics in the first half of this year.

Supplying to the leaders in two major fields

As the market recovered, Darui Electronics' operating performance also recovered, which is related to the company's market competitiveness.

In addition to the consumer electronics field, Darui Electronics has made layouts in the new energy field since 2022. In the new energy field, the company mainly develops, produces and sells precision structural and functional component products used in new energy vehicles, power batteries, energy storage batteries, energy storage equipment, and photovoltaic inverters.

Darui Electronics said that after more than 20 years of development, the company has become a platform supplier of "key components (functional devices, structural devices) and supporting automation equipment", and is committed to providing integrated comprehensive solutions for high-quality customers at home and abroad. Based on the requirements of customized electronic component products, small batches, multiple frequencies, and short development cycles, the company has formed a competitive advantage with manufacturing capabilities such as product solution design, process technology innovation, scientific scheduling, quality and cost control, supply chain management capabilities, rapid response customer service capabilities, and supporting automation equipment as the core of comprehensive solution capabilities.

The biggest competitive advantage of Darui Electronics is that it has a group of well-known corporate customers. According to disclosures, in the field of consumer electronics, the company's main customers include Samsung Vision, Avionics Holdings, VTech, Amphenol, Merry Electronics, Huatong Computer, Taijun Technology, Goertek, Luxshare Precision and other well-known consumer electronics core component manufacturers and manufacturing service providers in the industry.

According to the prospectus disclosed by Darui Electronics in 2020, the company supplies end customers such as Apple, Samsung, Huawei, OPPO, Xiaomi and other globally renowned companies through its main customer Samsung Vision.

In the field of new energy, as early as February 2023, Darui Electronics stated in an interview that the company's customers mainly include battery manufacturers such as CATL, Ruipu Lanjun, and Envision Power.

In the 2023 annual report, Darui Electronics introduced its core competitiveness. In addition to stable advantageous customer resources, the company also has advantages in innovative R&D, intelligent manufacturing and cost control. The company has independently developed a series of core technical processes that meet customer needs and industry development trends, and has relatively mature product production technology and equipment R&D capabilities. The company has introduced ERP, MES and other systems to optimize production scheduling and machine efficiency, reduce the number of product adjustments, and centralize work order production. The perfect quality control system and intelligent scheduling system have improved the company's product yield, thereby reducing unit product costs.