Incident: The company released its 2022 annual report, achieving operating income of 2.26 billion yuan, down 4.6% from the previous year; Guimu's net profit of 190 million yuan, down 31% from the previous year; net profit of 160 million yuan after deduction, a decrease of 25% over the previous year; net cash flow from operating activities was 350 million yuan, down 38% from the previous year. The performance was in line with expectations.
According to the first quarter report of 2023, the company achieved revenue of 540 million, an increase of 6% over the previous year; the net profit of Guimu was 508 million, an increase of 11% over the previous year; after deducting net profit of 44 million yuan, a decrease of 5% over the previous year; the performance was in line with expectations.
Equity incentive plan: 29.6 million restricted shares, accounting for 2.21% of the total share capital. Assessment requirements:
Net profit growth rate in 2023-25 compared to 2022 will not be less than 10%, 30%, 50%;
Revenue and gross margin were steady in 2022. Impairment losses and changes in fair value dragged down performance by product. In 2022, LED business revenue was 2.06 billion yuan, down 5.3% from the previous year. In an environment where demand in industries such as TV/laptop was sluggish, the company's revenue declined slightly. Revenue from other products in 2022 was 170 million, an increase of 5.6% over the previous year, mainly including the gradual expansion of applications of invisible light products. The consolidated gross profit margin was 24.2%, the same as the previous year, and the performance was steady.
The categories that had the greatest impact on profits in 2022: the sales/management expenses ratio increased by 0.67/0.65 percentage points respectively; financial expenses improved by 41.04 million yuan year-on-year, as exchange income increased by about 34.28 million yuan; asset and credit impairment losses increased by 26.9 million yuan; income from changes in fair value, investment income, and asset disposal income were -4050, +870, and -8.34 million yuan respectively; the above five items combined decreased operating profit by 25.18 million yuan year-on-year.
Mini LED is highly competitive and new products are progressing smoothly
Mini LEDs have entered a wide range of fields such as televisions, laptops, VR, vehicle displays, etc., and the delivery volume is growing rapidly, supplying domestic first-tier brand customers in batches; Mini LED panels have completed vehicle specification verification and are mass-produced by many customers; Micro LED ultra-high-definition display equipment meets the needs of various scenarios; high-power automotive lighting has been used in near and near lighting, daily travel, etc.; car-grade exterior lighting has entered supply systems including BYD, SAIC, GAC, Geely, Chery, Jianghuai, etc.; VCSEL products have made a breakthrough in consumer electronics/sensing/security monitoring industries; the company made a breakthrough in consumer electronics/sensing/laser security monitoring industries; the company made a breakthrough in the consumer electronics/sensing/laser security monitoring industry; the company made a breakthrough in the consumer electronics/sensing/laser security monitoring industry; the company made a breakthrough in the consumer electronics/sensing/laser security monitoring industry; the company made a breakthrough in the consumer electronics/sensoring/security monitoring industry; the company made a breakthrough in the consumer electronics/sensing High-speed light engine products such as 10G/25G/100G have been successfully deployed, and have been certified by leading foreign companies; high-end optical film products are delivered smoothly.
Profit Forecasts, Valuations, and Ratings
We expect the company's revenue to be 2.6 billion, 3.2 billion and 4.1 billion yuan respectively in 2023-25, with growth rates of 16%, 21% and 30% respectively. The net profit of the mother returned to the mother was 270 million, 370 million and 480 million yuan respectively. The growth rates were 43%, 37% and 29% respectively, and EPS was 0.2 yuan, 0.27 yuan and 0.36 yuan respectively. Given the company's leading position in LED backlighting and benefiting from the Mini backlight trend. Referring to the valuation of comparable companies, we gave the company 30 times PE/ in 23 years, with a target price of 6.0 yuan, which was downgraded to an “increase in holdings” rating.
Risk warning: The recovery in downstream demand fell short of expectations; the penetration rate of the Mini backlight fell short of expectations;