Focus on the field of LED display and provide one-stop solutions for light display scenarios. Established in 2004, the company is a supplier of LED display and lighting products and light display solutions with light display technology as the core. The main products include LED displays and professional lighting products. The company's sales model is mainly distribution, supplemented by quasi-direct sales. Customers include many of the world's top 500 enterprises, government departments, and top brands at home and abroad. The company's revenue for 2022 was 7.076 billion yuan (YoY -2.12%), 1H23 was 3,299 million yuan (YoY 4.21%); net profit for 2022 was 64 million yuan (YoY -65.09%), and 1H23 was 221 million yuan (YoY 81.33%).

In 2022 and 1H23, the company's smart display revenue accounted for more than 90%, and overseas revenue accounted for more than 50%.

The size of the LED market continues to rise, and demand in the display and lighting market is picking up. LED products are mainly used in LED displays, LED landscape lighting, LED professional lighting and other fields. According to TrendForce data, the global LED display market is estimated to be US$12.955 billion by 2026, corresponding to a CAGR of about 13.78% from 2021-2026. Since this year, demand for LED displays has continued to pick up due to the popularity of offline commercial performances and the revival of consumption scenarios. The company's light display scenarios are widely used. Smart Display provides direct display products such as professional displays, commercial displays, and rental displays to meet commercial, cultural tourism, and performance needs; intelligent lighting powers indoor and outdoor lighting scenarios; and cultural and creative lighting provides a full range of one-stop solutions for urban lighting and cultural tourism lighting.

Mini/Micro LED development is accelerating, and the company's UMini/UMicro products continue to be deployed. As a next-generation display technology, mini/microLED has the advantages of higher brightness, better luminescence efficiency, lower power consumption, and more detailed display effects, showing a booming development trend. According to TrendForce data, the global LED small-pitch display market size in 2022 was US$4.469 billion, corresponding to about 27.76% of the 2020-2022 CAGR; GGII expects the global Mini/Micro LED market to reach US$53/35 billion by 2025, respectively. The company continues to deploy Mini/Micro LEDs. UMiMi series P 0.4-P 1.2 pixel pitch products have achieved mass production on a large scale, and UMicro 0.4 products have been released globally and have mass production capacity.

LED applications continue to be enriched, and the company focuses on cutting-edge content-side fields such as digital virtual people. Frontier LED applications include XR virtual shooting, naked eye 3D, digital virtual people, etc. The company's Radio brand is ranked first in the world in the XR virtual shooting field with “LED giant screen+XR virtual technology”, and the company's share of the global digital studio market is nearly 80%. The company's naked eye 3D business content creativity forms a linkage effect with LED display sales, forming a naked eye 3D creative visual display solution integrating “LED display hardware+display control operation and maintenance software+creative video content+interactive content”. The company combined naked eye 3D with a digital virtual person to create “Qi Xiaoyi”, the first naked eye 3D digital virtual person in the LED display industry. The company became a Microsoft ISV partner and will continue to collaborate in the fields of AIGC, digital virtual humans, XR virtual shooting, naked eye 3D, and VR/AR.

Valuation and investment advice: Target price of 9.55-10.61 yuan, given a “buy” rating. The company's net profit from 2023-2025 is estimated to be 580/727/943 million yuan (YoY 811.86%/25.35%/29.65%). Based on the relative valuation, the target price is 9.55-10.61 yuan, and a “buy” rating is given.

Risk warning: valuation risk; profit prediction risk; technological innovation risk; management risk; major raw material price fluctuation and supply risk; accounts receivable risk; risk of impairment of goodwill; risk of impairment of goodwill; risk of global economic and social fluctuations; risk of exchange rate fluctuations; risk of market competition.