The company released the 2023 semi-annual report. The company's business development trend in the fields of new displays and intelligent driving is good, and there is plenty of room for future growth. Maintain buy ratings.
Key points to support ratings
Reversing the downward trend, the company's revenue/profit resumed positive growth in the first half of 2023. 2023H1 had revenue of 802 million yuan, +12.0%, net profit of 39 million yuan, +28.2% of the same period; net profit of 33 million yuan without return, +36.1%; gross profit margin of 22.0%, flat year on year; net interest rate of 4.87%, +0.6pcts year on year. 2023Q2's quarterly revenue was 472 million yuan, +7.0% yoy, +43.0%; net profit of 0.3 million yuan, -30.6% /month-on-month +233.3%; net profit after deducting non-return net profit of 27 million yuan, -29.3% /+440.0% month-on-month; gross profit margin of 21.8%, -2.5ts/pcs/month on -0.5pcts.
The net interest rate was 6.5%, -3.5 pcts/year on month +3.8 pcts. The main reason is that the company's business in the fields of new displays and intelligent driving is developing well.
The new display business is growing rapidly, and the prospects for AR/VR are promising. 2023H1's new display business achieved a 45% year-on-year increase in revenue, including a 97% year-on-year increase in projection product revenue; in terms of AR/VR, the company's partnerships with well-known domestic AR/VR companies such as Dapeng, Xiaopai, and Bright Vision progressed smoothly. The 2023H1 all-in-one OEM revenue increased 85% year-on-year, with sales volume exceeding 110,000 units. In the future, the company's new display business is expected to continue to achieve high growth due to the release of Apple's Vision Pro.
The intelligent driving business is growing rapidly, and millimeter-wave radar products have been designated by many automakers. The company's intelligent driving business developed rapidly, achieving a 214% year-on-year increase in revenue. The main products include in-vehicle lenses, millimeter-wave radar, AR-HUD, and in-vehicle projection. With its technical advantages, the company has obtained agreements from many automobile manufacturers such as BYD, NIO, Jimai, and JAC. We believe that the company's intelligent driving business is expected to continue to grow at a high level in the future with the “new four modernizations” of automotive electronics.
valuations
Due to a 24.7% decline in the company's performance in 2022 and a 28.2% increase in performance for the first half of 2023, none of which fell short of the growth rate originally predicted. We adjusted our profit forecast and expected the company to achieve earnings per share of 0.42 yuan/0.49 yuan/0.60 yuan in 2023-2025, corresponding to a price-earnings ratio of 42.8 times/36.2 times/30.0 times. Maintain buy ratings.
The main risks faced by ratings
Risk of macroeconomic stagnation; risk of decline in industry sentiment; risk of increased market competition and risk of fluctuation in raw material prices.