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Yangtze Business Daily News●Changjiang Business Daily reporter Li Jing

The rapid iteration of core products maintains a stable market share, and the performance of relay leader Hongfa Co., Ltd. (600885.SH) has grown steadily.

Recently, Hongfa Group released its 2024 interim report. In the first half of the year, the company achieved a total operating revenue of 7.231 billion yuan, a year-on-year increase of 8.89%; net profit attributable to shareholders of the parent was 844 million yuan, a year-on-year increase of 15.33%.

The Yangtze Business Daily reporter noted that Hongfa has been deeply involved in the relay field for nearly 40 years. Since its listing in 2012, the company has maintained stable performance, with both revenue and net profit growing steadily. In 2023, the company achieved revenue of 12.93 billion yuan and net profit attributable to the parent company of 1.393 billion yuan, both of which reached the highest peak since its listing. Among them, in the nearly 11 years since its listing, the company's net profit attributable to the parent company has a compound growth rate of more than 15%.

It is worth noting that with the strong growth in smart home, industrial automation, photovoltaic fields, the rapid development of global intelligent meters, intelligent automobiles and new energy vehicles, Hongfa’s relay products continue to maintain rapid growth, and its global market share continues to increase, surpassing Omron and Tyco Electronics to continue to rank first in the world.

Net profit increased by more than 20% in the second quarter

Continuing last year's steady growth in performance, Hongfa Group achieved good performance in the first half of the year.

Hongfa Group pointed out in its interim report that since the beginning of this year, the company has adhered to Hongfa's business characteristics, focused on increasing market share, applied active and flexible competition strategies, and seized market opportunities. Under the external environment of relatively high pressure in the macroeconomic situation, rapid increases in material prices, and intensified competition in some industries, the main operating indicators continued to achieve good growth.

The interim report shows that in the first half of 2024, Hongfa Group achieved operating income of 7.231 billion yuan, a year-on-year increase of 8.89%; net profit attributable to shareholders of the parent company was 844 million yuan, a year-on-year increase of 15.33%; non-net profit was 786 million yuan, a year-on-year increase of 4.20%; the company's operating efficiency indicator was per capita sales collection of 602,000 yuan, a year-on-year increase of 9.1%.

From a single quarter perspective, the company achieved operating income of 3.778 billion yuan in the second quarter, an increase of 11.89% year-on-year; net profit attributable to shareholders of the parent was 488 million yuan, an increase of 21.6% year-on-year; and net profit attributable to shareholders of the parent after deducting non-recurring items was 453 million yuan, an increase of 1.2% year-on-year.

Specifically, in the field of consumer electronics, Hongfa's power relay business, which is mainly used in the field of consumer electronics, has achieved good growth as a whole compared with the same period last year. Among them, the business related to the home appliance field has continued the recovery trend since the second half of last year, showing a good recovery growth. In the field of industrial equipment, the market demand has recovered, and the company expects that the global demand for industrial relays will also recover moderately in the second half of the year, bringing continuous improvement to the company's corresponding business.

In addition, Hongfa shares stated that in the field of electric power and energy, benefiting from the rapid increase in the number of smart meters installed worldwide and the continued increase in market share, the company's power metering relay business continued to grow rapidly, and the current orders on hand were full, and the capacity utilization rate has exceeded 90%. In the field of automobile transportation, the company's weak-current automobile relay business benefited from the increase in total downstream demand and the significant increase in market share, showing a high-speed growth year-on-year. The high-voltage control box project for new energy vehicles has been progressing smoothly, and has also shown good growth year-on-year, helping high-voltage DC relay products to continuously expand new application markets.

Relay product sales revenue: 6.494 billion

Public information shows that Hongfa Co., Ltd. was first founded in 1984, officially decided to use relays as its main business in 1987, and successfully went public in 2012 by acquiring the state-owned enterprise ST Liyang.

Relays are the main products of Hongfa Co., Ltd., with an annual production capacity and shipments of more than 3 billion units. In 2023, the company's relay products achieved revenue of 11.657 billion yuan, a year-on-year increase of 11.04%, and a gross profit margin of 38.72%, an increase of 2.18 percentage points. The company sold 2.782 billion relay products throughout the year, with sales volume increasing by 0.6% year-on-year, further consolidating its leading position.

In the first half of this year, Hongfa's product sales revenue totaled 6.919 billion yuan, a year-on-year increase of 7.14%, of which relay product sales revenue was 6.494 billion yuan, a year-on-year increase of 8%.

At the same time, Hongfa's core relay products maintained a high-speed iteration of new products. In the first half of the year, 193 new product development projects were approved for relay products, a year-on-year increase of 16%. Product technology innovation and intellectual property layout are promoted in a coordinated manner. In the first half of 2024, the company's R&D expenses reached 337 million yuan, an increase of 16.69% over the same period last year; 412 patents were applied for in the relay field, including 199 invention patents, accounting for 48%. There are 94 domestic invention patents and 105 international invention patents.

The company stated that it firmly implemented the "75+" strategy in the first half of the year. While promoting the high-quality development of its main relay business, it also promoted the solid development of five new product categories: low-voltage electrical appliances, film capacitors, connectors, current sensors, and fuses.

Among them, the low-voltage switch and complete set business remained basically the same year-on-year; the shipment of film capacitors increased by 20% year-on-year. In addition to gradually entering the new energy field, it has formally entered the power and electronics fields; the external shipment of connector business increased by 129% year-on-year, benefiting from the rapid growth, profitability has improved; the shipment of current sensors increased by 118% year-on-year, among which the sales of current transformers in the State Grid, Indonesia, Europe, and Australia markets have gradually increased, with a large increase in scale and rapid improvement in profitability. Fuse products have not yet been shipped in batches, but some projects of customers in new energy industries such as energy storage and photovoltaics have been verified and passed, and small batch shipments are expected to start in the second half of the year. The company is accelerating the planning of the layout of the fuse industry chain, striving to achieve the transformation from nothing to something as soon as possible, and helping the fuse business to develop sustainably and healthily.

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