Profit for the first half of 2023 fell short of expectations: BOE Precision is the only vehicle display module and system operation platform under BOE, providing customers with automotive display assemblies and smart vehicle display systems. In the first half of 2023, the company's revenue was HK$5.21 billion, an increase of 8%; net profit of HK$203 million, a decrease of 19%. Mainly due to pressure on product prices in the second quarter, inventory depreciation, and cost pressure brought about by the rise in the Chengdu factory. According to data from Omidia, the company ranked first in the world in vehicle screen shipping area, with a market share of 20.1%, which continued to rise; it ranked first in shipments of large sizes over 8 inches, with a global market share of 22%.
Covering mainstream NEV customers: Currently, the company's on-board display products cover different sizes and fields. They are used in automotive instruments, central control assemblies, entertainment display systems, rearview mirrors, ARHUD, etc., and have launched various technical products such as OLED, LTPS, BD Cell, Mini-LED, 3D, large size, multi-screen, curved surface, and full fit. The coverage rate of total domestic automobile production has increased from 30% in the same period last year to 50%. The coverage rate of the total production of mainstream NEVs in China has increased from 41% to 60%, and continues to maintain market share among leading OEMs First, lock in long-term orders. Price pressure eased somewhat in the second half of the year. The system business has provided Xiaopeng with instruments and central control display assemblies, and has also received orders from North American customers, and is expected to double throughout the year.
The overseas market has great potential: the overseas car display market is far larger than the domestic market. The company set up an overseas mission team. The top European and American brand projects in the first half of the year have already surpassed the whole of 2022. The overseas revenue target for 2025 will be raised to over 50%.
Chengdu Vehicle Display Base: It is expected to achieve design production capacity within the year, with an annual production of about 15 million in-vehicle displays after delivery. Currently, it covers 1.95 to 44.8 inches. The company implements a method where self-production and ODM coexist, and adheres to an asset-light strategy. The rise in short-term revenue has had an impact on the company's costs, but at present it is already the most advanced automotive display module base in the world, which is expected to lay a good foundation for the company's long-term growth, especially the development of overseas markets.
Target price of HK$1.27 billion, purchase rating: We forecast the company's revenue for 2023-2025 to be HK$11.5 billion, HK$13.8 billion and HK$164 billion, respectively, and net profit attributable to the parent company of HK$500 million, HK$6.2 billion and HK$790 million, respectively. The company was given a target price of HK$12.7, corresponding to 20 times the PE valuation in 2023. There is room for an increase of 71.8% from the current price, and a buying rating.