Incident: On the evening of October 30, the company disclosed its report for the third quarter of 2023. According to the company's third quarter report, the company achieved revenue of 7.90 billion yuan, -10.29% year-on-year; realized net profit of 328 million yuan, -260.90%; realized net profit of 328 million yuan, -260.90%; and realized net profit deducted from non-return to mother - 372 million yuan, -378.53% year-on-year. In the single quarter of 2023Q3, the company achieved revenue of 2,890 billion yuan, -4.64%; realized net profit of 49 million yuan, -148.57% of the same period; and realized net profit of non-treasured net profit of -71 million yuan, -209.23% year-on-year.
Q3 Revenue and profit continued the recovery trend month-on-month, and profitability is expected to improve. (1) Revenue side: The revenue of the 23Q1-Q3 company was 19.58/22.42/2,890 billion yuan, respectively, -2.37%/-21.82%/-4.64% in the single quarter, and -35.44%/14.52%/28.89% in the single quarter. The company's revenue for the second consecutive quarter was positive month-on-month, and the year-on-year decline also narrowed, indicating a gradual recovery in the company's revenue. (2) Margin side: The gross profit margin of 23Q1-Q3 in a single quarter was 8.30%/9.45%/7.67%, respectively, and the quarterly net interest rate was -9.81%/-4.75%/-2.14%, respectively. Although the company's net interest rate still failed to turn a loss into a profit, the net profit margin increased slightly for two consecutive quarters, and profitability is expected to improve. (3) Profit side: 23Q1-Q3's net profit for the single quarter was -0.49/-1.02/-177 million yuan, respectively. Losses continued for three quarters but improved month-on-month, continuing the recovery trend. The total loss for the first three quarters of 23 years was -328 million yuan, mainly due to a sharp increase in financial expenses and R&D expenses.
Consumer electronics is dawning, and we are firmly optimistic about the future of automotive optics. (1) Traditional optics: A number of mobile phone brands launched new products in the third quarter, combined with the National Day and Double Eleven shopping festival in the next four quarters, which will help to upgrade consumer electronics products, thereby catalyzing the accelerated recovery of the consumer electronics industry, which has been dormant for a long time. As a leading global high-definition wide-angle lens company, the company has core competitiveness in the traditional field of optics (high-definition wide-angle and mobile phone optics business). With the dawn of consumer electronics, the company's traditional optical business is expected to improve well. (2) Vehicle optics: In 2021, Tesla introduced Transformer into the field of autonomous driving. BEV+Transformer empowers cars to sense the surrounding environment with high accuracy on their own. Autonomous driving can gradually get rid of dependence on high-definition maps, and autonomous driving routes with multi-sensor fusion and high-precision maps are gradually being replaced by the “heavy sensing, light map” mode. Currently, mainstream domestic smart driving players such as Huawei, Wei Xiaoli, Horizon, Baidu, My Little Pony Zhixing, and Mio Zhixing have all followed the BEV “heavy perception” route and made a big splash in the city's NOA this year.
According to Yanzhi Auto's analysis, under the BEV+transformer route, each car will need to add 4-6 cameras, 6-8 serial chips, and 2-3 de-serialized chips, which is expected to bring opportunities to the intelligent driving vision industry chain.
Increase R&D and production capacity to stabilize existing overseas business. In order to actively and rapidly develop the North American optical and imaging market, utilize the established precision optical component manufacturing base and established good market reputation, focus on application needs in strategic emerging industries and key areas such as mobile smart terminals, advanced automotive safe driving assistance, and smart homes, further expand the market share of optical lenses and optoelectronic components, promote the internationalization process of the company's products and customer services, further enhance the company's popularity in the international market, and stabilize the company's existing overseas business. On July 24, the company reviewed and passed the “Bill on Capital Increase Subsidiaries to Build a Mexican Plant”, and stated that the Mexican plant is under construction and is scheduled to be put into operation by the end of this year.
Investment suggestions: Affected by weak downstream demand, we adjusted the company's 2023-2025 operating income forecast to 105.87/120.70/13.950 billion yuan, adjusted the company's net profit forecast to -1.50/2.08/602 billion yuan, and maintained a “buy” rating based on the market value on November 1 corresponding to 2024 and 2025 PE of 53 and 18 times respectively.
Risk warning: risk of fluctuations in raw material prices; risk of macroeconomic recovery falling short of expectations; risk of downstream intelligent driving development falling short of expectations.