Event: the company released its third quarterly report for 2023:

1) 23Q1-3: revenue 2.54 billion yuan, yoy+42.6%, return net profit 220 million yuan, yoy+93.1%, deduction non-return 190 million yuan, yoy+152.9%.

2) 23Q3: revenue 950 million yuan, yoy+39.2%/qoq+7.1%, return net profit 77 million yuan, yoy+137.7%/qoq+20.1%, deduction non-return 66 million yuan, yoy+245.7%/qoq+17.5%.

The actual performance was close to the forecast limit, and the gross profit margin increased slightly from the previous month: the company had predicted that Q3 would achieve a net profit of 0.72% to 0. 02%.

7.7 billion yuan, deducting 0.62-0.67 million yuan from non-returning mother, the actual performance is close to the upper limit of the forecast. Q3 company as a whole achieved steady growth compared with the same month-on-month, mainly due to the steady progress of business at home and abroad and the sustained growth of orders. Q2 as a result of the appropriate price reduction strategy adopted by the company to gain a larger market share, coupled with the increase in the proportion of domestic income, the gross profit margin has declined from the previous month, the Q3 price strategy remains robust, and the gross profit margin has increased by about 1.2pct.

Domestic demand recovers steadily, high-end display penetration accelerates: domestic LED display demand is in a steady recovery process. According to Luotu Science and Technology statistics, 23H1 domestic small spacing LED display sales area + 20.2% year-on-year, the average unit price rebounded to 147,000 yuan / square meter. In addition, with the gradual maturity of cutting-edge technologies such as Mini/Micro LED and COB, the application cost has been reduced, and the application scenarios of high-end LED displays have been continuously broadened. the penetration of micro-pitch displays is expected to increase from 5% to 15% in 2022-25, and the industry is expected to accelerate its growth.

Investment advice: in 2023-25, we expect the company's return net profit to be 3. 5 million yuan, 50 million yuan, and 60 million yuan, corresponding to a PE of 16. 5%.

7According to 11.7Compact 8.6 times, maintaining a "buy" rating.

Risk hint: the development of new display technology is not as expected, the sales of high-end products are not as expected, the development of energy storage business is not as expected, and the risk of untimely updating of information and data is reported.