The results in the third quarter exceeded expectations, with revenue and profits hitting record highs in a single quarter. The company's 23Q3 achieved revenue of nearly 1.7 billion, an increase of 29% over the same period last year, and a month-on-month increase of 74%. The net profit of Q3 was 260 million yuan, an increase of 11% over the same period last year. The total revenue in the first three quarters was 3.55 billion yuan, up 11% from the same period last year, and the net profit was 440 million yuan, down 9% from the same period last year. We believe that under the background of relative pressure on demand in the first half of the year, the company Q3 mainly benefited from the continuous contribution increase of North American major customers such as the scheduled volume of microprism and thin film optical backplane, as well as the best-selling new models of domestic head brands. the performance inflection point is clear. Gross profit margin also rose month-on-month, driven by the peak season of new business and stock preparation. Q3 gross profit margin increased by 28.6%, an increase of nearly 2pct. The R & D cost decreased steadily with the mass production of the microprism project. The R & D cost of Q3 was 70 million yuan, which was 17% lower than the same period last year and 46% lower than the previous year.
The mass production of the microprism project is smooth, and the volume of 23H2 is on schedule. Miniature prism module is the core device of optical zoom camera, which innovates to solve the optical zoom problem of ultra-thin smart phone. Apple Inc's new flagship model iPhone 15Pro Max is equipped with a periscope lens module for the first time and uses a quadruple reflection prism module to achieve 5x optical zoom. The process of miniature prism module products is complex, and the processing is extremely difficult. As one of the few suppliers with mass production capacity in the world, the company has successfully entered the major customer supply chain. With the opening of the stock cycle of Q3 major customers, microprism products mainly began to mass production in the second half of the year. At present, the progress is smooth, and the gross profit margin is gradually approaching a reasonable level. As the scale expands in the future, there is room for further improvement in gross profit margin. In the short and medium term, it benefits from the opening of Q3 stock season for major customers, and from the increased penetration of periscope lenses among major customers and other Android brands in the medium and long term.
Automotive electronics business continues to expand customers, opening the second growth curve. The company's automotive electronics business layout includes AR-HUD/WHUD, lidar windows, vehicle optical components and other products. 23H1 won all the AR-HUD and W-HUD projects of Jaguar Land Rover EMA platform and became the first HUD tier1 supplier to enter the overseas head vehicle factory. The domestic side has also realized the standard configuration of AR-HUD in the Changan Deep Blue S7 model, newly entered Changan Mazda, Geely, Dongfeng and other mainframe factories, and won more than ten fixed-point projects, domestic and overseas two-wheel drive, laying the cornerstone of long-term growth in the future.
We forecast that the company's 23-25 net return profit will be 6.4x81x101b respectively (the original forecast for 23rd-24th year will be 70000000 RMB respectively, mainly reducing the revenue of optical components and semiconductor optical business, raising the forecast of gross profit margin and R & D expense rate). According to the comparable company's 23-year valuation of 36 times PE, the target price is 16.56RMB and the buy rating is maintained.
Risk hint
The sales volume of end customers is lower than expected, the progress of new product development is not as expected, and the risk of gross profit margin decline.