Incidents:
1. The company released its 2022 annual report: in 2022, the company achieved revenue of 10.935 billion yuan (up 3.57% year on year) and achieved net profit of 93 million yuan (down 17.47% year on year); among them, 2022Q4 achieved revenue of 3,032 billion yuan in a single quarter (down 11.78% year on year, up 0.07% month on month), achieving net profit of -111 million yuan (down 210.52% from the previous month, net profit of 21Q4 was -76 million yuan, 22Q3 net profit of 1.01 million yuan) 100 million yuan), gross profit margin 13.55% (up 2.50 pct year on year and 1.13 pct month on month).
2. The company released a report for the first quarter of 2023:2023Q1 achieved revenue of 1,958 million yuan (down 2.37% year on year and 35.44% month on month), achieved net profit of -177 million yuan (down 542.35% year on year, net profit of 22Q1 was 40 million yuan), and gross profit margin was 8.30% (down 3.69 pct year on year and 5.25 pct on month).
Comment:
The optical industry is developing well, and credit impairment is dragging down performance. In 2022, the optics industry ushered in an opportunity of increased overall demand, while also facing fierce competitive challenges. The company's early strategic layout in the automotive optics industry began to unleash its strategic advantage, but it lost money due to bad debt accounting in 22Q4. By business, the company's core optics business revenue in 2022 was 3,504 billion yuan (up 31.30% year on year), gross profit margin was 30.08% (up 7.28 pct year on year); touch display business revenue was 3,576 billion yuan (down 27.70% year on year), gross profit margin was 4.12% (down 1.84 pct year on year); application terminal business revenue was 2,441 billion yuan (up 110.61% year on year), gross profit margin 4.97% (down 4.61 pct year on year); integrated circuit and trade business revenue was 1,415 billion yuan (same as year on year) A decrease of 20.71%), gross profit margin of 0.25% (an increase of 0.13pct over the previous year). Among them, the company's high-definition wide-angle business still occupies a leading position in the industry, and the revenue of the vehicle camera and vehicle video module business increased 403.98% year-on-year. Credit impairment dragged down performance: In '22, the company accrued 183 million yuan of bad debts in accounts receivable. In the end, credit impairment losses totaled 180 million yuan in the current period, causing 22Q4 losses, making the release of annual results lower than expected.
Multi-point layout of the in-vehicle business. The company continues to vigorously develop automotive optics projects, and dozens of automotive ADAS projects targeting mass production are in progress. Relying on Hefei Zhixing Optoelectronics Co., Ltd., two projects have already started. One has completed the first phase of construction; Jiangxi Lianchuang Electronics Co., Ltd. already has an annual production capacity of 24 million smart car optical lenses and 6 million sets of automotive optical imaging modules; Tongcheng Lianchuang Electronics Co., Ltd. was established, which mainly produces glass lenses, automotive ultrasonic radars, and automotive microwave radars. In terms of automotive ADAS lenses and image modules, in 2022, the company continued to deepen strategic cooperation with well-known domestic and foreign advanced automotive assisted safe driving solution companies such as Horizon, Baidu, Mobileye, and Nvidia to expand the market share of automotive lenses in well-known domestic terminal car manufacturers and well-known European and American automotive electronics manufacturers such as Valeo, Aptiv, ZF, and Magna.
Maintain a “buy” rating. Based on the company's latest performance, considering that it will still take time for the company's downstream consumer electronics to recover, we revised the company's 2023-2024 net profit forecast to 290 million yuan (adjustment ratio is -20.1%, same below) /450 million yuan (-10.4%) respectively. The original forecast was 3.7 billion yuan and 490 million yuan respectively. The new forecast for 2025 is 50,000,000 yuan, and the corresponding PE is 34x/23x/20x respectively. We are optimistic about the company's product and technology accumulation in the ADAS field. As automobile intelligence progresses, the company is expected to continue to benefit and maintain its “buy” rating.
Risk warning: downstream demand falls short of expectations, customer expansion or introduction falls short of expectations, industry competition increases risks, and risk of credit impairment.