Recently, Shunyu Optical Technology and Ruisheng Technology released performance reports one after another, yet they received completely different treatment after the results.
Shunyu Optical Technology plummeted for two consecutive trading days after the results, and its stock price hit a new low of nearly 7 years; Ruisheng Technology's stock price rose in response, rising by more than 11% on the second trading day after the results, and the stock price hit a new high.
Why did Shuang Shu, which used to be considered quite popular, have there been such a big split now?
Ecological sustainability is the key reason
Although judging from the annual data, the consumer electronics market was still weak in 2023, the market environment improved in the second half of the year. According to Counterpoint data, global smartphone sales began to show a year-on-year increase in October 2023 — the first reversal after 27 months of continuous year-on-year decline in the market.
Ruisheng Technology benefited deeply from the recovery in demand in the mobile phone market. In the second half of the year, it achieved revenue of 11.2 billion yuan, a year-on-year increase of 21.48%; net profit to mother was 590 million yuan, up 25.2% year on year, up 293% month on month; gross margin was 19.2%, up 1.4 percentage points year on year and 5.1 percentage points month on month. Judging from the above data, performance has begun to stop falling and pick up, and an upward inflection point has been established; under the scale effect, expenses will be diluted more quickly, releasing higher profit elasticity.
In terms of financial data and operating data, the company benefits from being driven by “multiple carriages”. In 2023, ASP for acoustic products rebounded, driven by an increase in its share in the middle and high-end market, as well as new platforms and new technology; optical business revenue increased 12.7% year on year, 6P lens shipments increased rapidly, and production capacity increased steadily due to increased WLG glass lens yield; precision structural parts revenue increased by more than 30% year on year, thanks to more high-end flagship machines and folding machines using motors and metal frames, and innovative products such as shafts and VC cooling panels; sensors and semiconductors; the company continues to promote self-developed high-performance MEMS microphones and Android devices The share of medium- and high-value product shipments increased by about 17 percentage points to more than 50% over the same period last year; in terms of emerging businesses, the company has made many breakthroughs in smart cars, AR/VR, AI, etc., and has reached cooperation with industry leaders.
However, it must be mentioned that achieving a balanced and positive performance is apparent. A perspective report must “go from the table to the inside” to find the essence of growth in order to determine whether the drivers of growth can continue in the future. Judging from the outside and inside, Ruisheng Technology's performance has benefited from the company's growth to the middle and high-end, and to a wider range of fields.
A continuously evolving ecosystem is the core essence behind success —
With the advantages accumulated over many years of deep cultivation in the industry, Ruisheng Technology has continued to expand with technical support, gradually extending from acoustics, to optics, and then to the fields of precision structural parts, sensors, and semiconductors. On this basis, through vertical integration of various businesses, the company can not only explore the industry value chain to seek more opportunities, but also build core competitiveness.With this, Ruisheng Technology can better grasp technology trends and reuse capabilities in more industries, including mobile phones, AR/VR, and smart cars, continuously breaking boundaries — however, such capabilities have been underestimated for the time being. The impression that some investors have of Ruisheng Technology is still above the acoustic leader in the traditional mobile phone industry chain, but in reality, Ruisheng Technology's ecological system can effectively aggregate customer pools and resource pools, form collaboration between various sectors, and achieve continuous growth and evolution.
With the continued empowerment of such an ecosystem, the results of 2023 may be just the beginning. In particular, it is worth mentioning that financial data is lagging behind and is a posteriori indicator. Instead of making lagging estimates based on historical data, we can see this more clearly in a forward-looking perspective.
Start to rise to the top of the tech wave
There is no doubt that globally, there are currently two major technology waves — AI and smart cars. The dynamically evolving ecosystem has enabled Ruisheng Technology to grasp these two major technological waves very well.
In terms of smart cars, Ruisheng Technology has a far-reaching layout. Ruisheng Technology successfully acquired PSS (Premium Sound Solutions), an established star automotive acoustics company, in 2023. PSS has a 50-year history. It is the world's leading supplier of high-end audio systems. It has covered most mainstream overseas car brands, and is a tier-1 supplier of original automotive parts (i.e. Tier 1). The acquisition of PSS was a good step, and Ruisheng Technology began to gain prominence in the high-end market.
According to industry chain research results, PSS customers covered most car brands such as BMW, Audi, Bentley, and Volkswagen. In particular, the penetration rate in the domestic new energy market has increased rapidly in recent years. According to research reports and media reports, Ideal Auto's first pure electric MPV models, ideal MEGA, L7, L8, and L9, as well as speakers for popular models such as the Huawei M9, all come from PSS owned by Ruisheng Technology.
The management of Ruisheng Technology revealed at the performance conference that PSS's business has developed rapidly this year. It is expected to bring in revenue contributions of 3 to 3.5 billion yuan in 2024 and achieve a net profit of about 200 million yuan.
In fact, prior to the acquisition of PSS, Ruisheng Technology had been deeply involved in the automotive field for more than 2 years, with more than 600 to 1 billion designated projects and scales. After the acquisition of PSS, Ruisheng Technology seemed to have planted wings in the smart car field. Reviewing history, Ruisheng Technology's development path in mobile phones is to first gain a foothold in acoustics and then gradually expand into more fields. Currently, in the smart car field, with Ruisheng Technology also making breakthroughs in acoustics, the company is expected to quickly replicate the success of the previous stage.
Regarding the wave of AI technology, AI is putting forward new high requirements for hardware innovation and reshaping acoustics, optics and other technologies. Earlier, Tianfeng International analyst Guo Mingyi published an article stating that Ruisheng Technology and Goertek Co., Ltd. have been identified as iPhone 16 microphone suppliers, and the distribution of shipments is comparable. Benefiting from the upgraded specifications, the unit price of each iPhone 16 microphone will be at least 100— 150% higher than the iPhone 15. Guo Mingyi pointed out that Ruisheng Technology's revenue base is relatively small, so it is relatively more beneficial.
The AI phones that arrived earlier than the iPhone 16 are the Samsung Galaxy S24 series, which was released at the end of February, and the Huawei P70 series, which will be released in April. The P70 series is considered to be the most important starting point for AI phones in 2024. It may surpass the Huawei M60 and become the core of the AI phone market. According to market sources, Ruisheng Technology is the supplier of these two major series. IDC predicts that in 2024, global shipments of next-generation AI phones will reach 170 million units, accounting for 15% of total smartphone shipments. At present, Ruisheng Technology has provided innovative AI products to customers of these terminal brands. It is foreseeable that the company will have a great opportunity to seize opportunities in the future and even usher in a new bright moment.
With the advent of the dividend era, Ruisheng Technology is expected to accelerate the opening of new growth boundaries. The market's impression of Ruisheng Technology is time to update.