Event description

According to the three-quarter report of 2023, the company's operating income in the first three quarters was 1.539 billion yuan, down 7.40% from the same period last year; the net profit was 58 million yuan, down 68.81% from the same period last year; and the net profit from non-return was 42 million yuan, down 74.83% from the same period last year.

Event comment

In the third quarter, the company achieved operating income of 567 million yuan, down 0.53% from the same period last year; net profit from home was 34 million yuan, down 31.26% from the same period last year; and net profit from non-return was 30 million yuan, down 24.41% from the same period last year. The non-recurrent profit and loss in the first three quarters was mainly 14.9 million yuan in government subsidies. Compared with the same period last year, the company's gross profit margin increased 1.81pct and net profit increased 3.91pct in the third quarter compared with the same period last year, mainly due to the stabilization of the price of large-size polarizers in the peak season, the recovery of the price of small-size mobile phone polarizers and the recovery of the company's overall growth rate, while income tax expenses fell more in the third quarter. However, the overall profit level of the company still has a lot of room to recover from the same period last year and the historical average.

From the downstream of the company, the growth rate of large-size TV panels has returned to more than 80%, effectively alleviating the upstream growth rate and price pressure. In the fourth quarter, it is estimated that due to the slow season of demand, the downstream crop movement rate will be gradually adjusted to 70%, 75% of the fixed output. The price of some small-size mobile phone panels has rebounded, and the persistence remains to be seen.

In terms of new business, the company is currently one of the main suppliers of Pancake optical films for high-end VR products, benefiting from the lightweight and lightweight design trend of head-wearing products, with considerable stand-alone value. Recently, Meta has launched a new generation of QUEST headshow, which is expected to boost VR sales. In addition, the technology upgrading of major North American customers on MR products and the trend of supply chain transfer to the mainland will also open up the company's imagination of VR optical materials.

We believe that the current company's stock price is only about 20% away from the historical bottom, and the margin of safety is OK. With the promotion of the domestic substitution strategy of downstream customers and the loss of the share of overseas competitors, the competition pattern of the company is expected to be improved in the long run. It is estimated that the EPS of the company from 2023 to 2025 is 0.60,1.36 and 2.70, and the corresponding PE is 54x, 24x and 12x, respectively.

Risk hint

1. Consumer electronics recovery is less than expected;

2. The progress of new product volume is not as expected.