Event: the company released a report on the third quarter of 2023, saying that in the first three quarters of 2023, the company achieved revenue of 2.537 billion yuan, an increase of 42.57% over the same period last year, a net profit of 219 million yuan, an increase of 93.09% over the same period last year, and a deduction of 193 million yuan for non-net profit, an increase of 152.93% over the same period last year. On a quarterly basis, Q3 achieved revenue of 946 million yuan in 2023, an increase of 39.20% over the same period last year, an increase of 7.15% over the same period last year, a net profit of 77 million yuan, an increase of 137.66% over the same period last year, an increase of 20.12% over the same period last year, and a deduction of 66 million yuan for non-net profit, an increase of 245.73% over the same period last year and 17.55% over the previous year.

Rapid year-on-year growth in performance and excellent cash flow performance: in the first three quarters of 2023, the total amount of orders realized by the company was about 3.484 billion yuan, an increase of about 42.44% over the same period last year. The rapid growth of orders led to the rapid growth of the company's operating income. In terms of cash flow, thanks to the increase in sales rebates and inventory purchases, the company realized a net operating cash flow of 401 million yuan, an increase of 72.76% over the same period last year, which was much higher than the return net profit of 219 million yuan in the same period. In the first three quarters of 2023, the company's comprehensive gross profit margin was 31.96%, an increase of 0.50pcts over the same period last year; the net profit rate was 8.53%, an increase of 2.13pcts over the same period last year, and profitability was significantly improved. In terms of expenses, the company's sales, management, R & D and financial expense rates in the first three quarters of 2023 were 14.07%, 4.89%, 4.57%, 0.03%, respectively, and the year-on-year changes were-2.64/-0.53/-0.28/0.20pcts.

Huizhou plant phase II part of the infrastructure completed, looking forward to the release of new product capacity: the company continues to increase investment in core technology such as Micro LED, virtual shooting, LED display fire and flame retardant, strongly supporting the comprehensive improvement of the competitiveness of the company's products in high-end markets such as Europe, America and Japan, and the continued leadership in cutting-edge technologies such as XR virtual production, outdoor naked-eye 3D display, Micro LED and COB. During the reporting period, part of the infrastructure of the second phase of the company's Huizhou plant was transferred from projects under construction to fixed assets. By the end of the third quarter, the book value of the company's fixed assets was 559 million yuan, an increase of 75.04% over the same period last year. The second phase of Huizhou Intelligent Manufacturing Center started construction in 2021, with a total construction area of about 100000 square meters. The project was originally expected to invest no more than 150 million yuan, but on April 26, 2021, the company will invest no more than 200 million yuan for the second phase of the Huizhou plant expansion project. After the completion of the project, the overall annual output of the company's park display screen can reach up to 600000 square meters, and more Micro LED and COB high-end products will be mass-produced here in the future.

With the further penetration of COB technology into the display market, new MIP products are expected to enhance their competitiveness: as many upstream of the industrial chain and display screen factories increase their investment and competition in the COB process, product costs have shown signs of going down, and the market penetration has been further improved in LED. In 2023, H1, the company's business performance based on COB technology increased by more than 200% compared with the same period last year, and the product quality was unanimously recognized by high-end customers at home and abroad. At a time when the application of micro-pitch LED display is accelerating and the COB market is booming, Abyson COB Manufacturing Center provides strong support for further expanding COB product production capacity and seizing market opportunities. At the same time, the company's new MIP product series is under research and development and storage, and is expected to cooperate with COB products in the middle and high-end market in the future to enhance the competitiveness of the company's products; MIP technology will form complementary advantages with COB products to form a dual-technology route product strategy under the panel market trend. With the industry-leading display technology and rich product layout advantages, the company is expected to benefit from the release of LED display market demand at home and abroad, helping the company's performance to continue to grow.

Maintain the "overweight" rating: the company is deeply engaged in the LED display industry, has established a sound global marketing and service network, with leading technology reserves, high-end brand image and good industry reputation. Benefiting from the LED display industry overseas market demand recovery and Micro LED, COB and other technology penetration, the company's growth momentum is more abundant, it is estimated that the company's 2023-2025 net profit is 324 million yuan, 429 million yuan, 568 million yuan, EPS is 0.89,1.18,1.56 yuan respectively, PE is 17X, 13x, 10X, to maintain the "overweight" rating.

Risk hints: technological innovation risk, business globalization risk, exchange rate fluctuation risk, new business expansion is not as expected.