Overview of events

On the evening of October 26, 2023, Otto Electronics released its Triple report for 2023. During the reporting period, the company realized operating income of 491 million yuan, down 24.94% from the same period last year, and realized net profit of 6 million yuan, down 76.69% from the same period last year.

Stable overseas demand and higher gross profit margin

Affected by the slow recovery of demand in the domestic market and the postponement of some orders, the company's performance declined in the first three quarters, but the company's overseas market maintained growth, with overseas market revenue reaching 231 million yuan in the first three quarters, up 12.99 percent from the same period last year. In terms of expense rate, the company's sales expense rate in the first three quarters was 17.45%. Compared with the same period last year, the sales expense rate increased by 2.77pct, the management expense rate increased by 11.18%, the 2.41pct increased by 12.26%, the R & D expense rate increased by 12.26%, and the financial expense rate increased by-3.30% compared with the same period last year. 0.99pct decreased compared with the same period last year. The company's overall gross profit margin in the first three quarters was 40.34%, an increase of 6.69pct over the same period last year.

The newly signed orders have a good momentum, focusing on the high gross margin market segment

In the third quarter of 2023, the company seized the opportunity of a pick-up in market demand and further increased its market development efforts. Newly signed contracts totaled 325 million yuan, an increase of 20.71 percent over the same period last year, and an increase of 56.12 percent month-on-month, close to the sum of newly signed contracts in the first half of the year. As of October 26, 2023, the total amount of on-hand orders and winning bids is about 549 million yuan. From the perspective of sub-areas, orders are mainly concentrated in high-margin industries. In the film and television sector, the company signed 167 million yuan in new contracts in the first three quarters, an increase of 73.75 percent over the same period last year, of which 119 million yuan was signed in the third quarter, an increase of 299.50 percent. In the financial and communications field, the company signed 255 million yuan in contracts in the first three quarters, an increase of 5.46 percent over the same period last year.

Undertake a number of well-known XR/VP virtual studio projects, join hands with China Film to develop LED cinema screen new blue sea market company in the world to undertake a total of 60 medium and large XR/VP virtual studio projects, including NVIDIA Corp, Amazon Cloud, Japanese Dongying and other industry well-known virtual shooting projects The company participated in the compilation of "Technical requirements and Measurement methods of Cinema LED display projection system" led by China Film Co., Ltd., and cooperated deeply with China Film Group to develop nationally produced, high-tech format LED film screens, which passed the DCI certification test in August this year. In October, the company signed the "China Film CINITY LED Film screen batch order Agreement" with China Film Barco (Beijing) Electronics Co., Ltd., the company will formally open up the new blue ocean market for LED cinema screens, and join hands with China Film to provide LED cinema screen projection systems to major cinema chains. We expect the new LED cinema screen business to bring significant increments to the company's future performance growth.

Investment suggestion

The performance during the reporting period was stable. We adjusted our previous profit forecast and estimated that the company's operating income from 2023 to 2025 would be 775 and 172,000,000 yuan respectively (the previous forecast was 1.25,000,000 yuan). The net profit of homing home was 0.51010,000,000 yuan respectively (the previous forecast was 11,000,000 yuan). The EPS is 0.08 / 0.15 / 0.20 (from the previous forecast of 0.17 / 0.25 / 0.30), the closing price on October 27 is 6.27 / 10 / 27, and the PE of the previous share price is 81-41-31 / 10, respectively, maintaining the "overweight" rating.

Risk hint

Industry demand repair is less than expected risk, order landing rhythm is not as expected risk, project payback risk, AI technical regulatory risk.