Event: on October 22, the company released a report on the third quarter of 2023, showing operating income of 568 million yuan in the first three quarters of 2023, an increase of 33.87% over the same period last year, and net profit of 110 million yuan, up 42.51% over the same period last year.
Q3 alone achieved operating income of 215 million yuan, an increase of 39.85% over the same period last year, and a net profit of 39.61 million yuan, an increase of 68.66% over the same period last year.
The gross profit margin has increased sharply compared with the same period last year, and overseas business has entered the volume period. The company's Q3 gross profit margin reached 50.78%, a year-on-year increase in 14.01pcts and a month-on-month increase in 6.31pcts. We believe that it is mainly due to the increase in the proportion of sales of high-end video processing equipment, and the volume of high-margin video equipment such as 4K and 8K has led to a substantial increase in the company's overall gross profit margin.
Since the beginning of 2023, the company has actively expanded its overseas distributors. At present, it has participated in large-scale exhibitions such as ISE2023 Barcelona, 2023 Las Vegas Radio and Television Show, Saudi Lighting and Acoustics Show, InfoComm USA Exhibition, etc., and has contacted and established cooperative relations with many overseas customers. In 2022, the gross profit margin of overseas business is 73.47%, which mainly includes the sales of video processing equipment. With the continued development of overseas business, the company's gross profit margin is expected to increase gradually.
Increase sales and R & D investment, internal control management significantly improved. The company's Q3 sales expense rate and R & D expense rate were 15.68% and 15.15% respectively, increasing 6.12pcts and 4.70pcts year-on-year, and continuously increasing sales and R & D investment; Q3 management expense rate was 4.91%, a decrease of 1.44pcts compared with the same period last year, indicating that the company strengthened internal control management and significantly improved operational efficiency.
General products to create customized programs, empower literature and tourism publicity and urban governance. The company receives and sends cards and video equipment for universal products, the company uses general products to create customized display control scheme to provide customers with unique visual effects experience. The company layout meta-universe track, help Xianyang high-tech zone meta-universe digital living room completed, create a "Chinese screen valley"; through cloud computing, data visualization and other technologies, empower Xianyang high-tech zone, such as urban governance, industrial development and economic operation, and improve the comprehensive use of intelligent cities.
The company deeply customizes the display and control scheme for the Shandong Museum, through double 4K input, ultra-high-definition picture quality, multi-screen interaction and other technologies to enhance the canal culture immersive experience and promote the development of cultural and cultural industry.
Investment suggestion: domestic video image display control leader, card position in the middle reaches of the LED industry, with video processing technology corner overtaking, will achieve rapid volume of new products video processing equipment. We predict that the company will achieve income of 10.20,14.66 and 2.07 billion yuan from 2023 to 2025, and net profit of 2.15,3.21 and 483 million yuan respectively, corresponding to PE of 26x, 18x and 12x, maintaining the "overweight" rating.
Risk hints: overseas expansion falls short of expectations; technological progress falls short of expectations; and government spending falls short of expectations.