Incidents:
On October 31, the company released its 2023 three-quarter report. The first three quarters achieved total operating income of 7.90 billion yuan, an increase of -10.29% over the previous year; net profit of the mother was 328 million yuan, an increase of -260.9% over the previous year.
Revenue for the third quarter was 2,890 billion yuan, -4.64% year-on-year; net profit attributable to shareholders of listed companies was -489.13,400 yuan, -148.57% year-on-year.
Vehicle optical emmission+consumer electronics recovery, and the company's performance improved month-on-month:
The company's products are widely used in downstream fields such as mobile phones, automobiles, drones, etc., and is a leading global manufacturer of high-definition wide-angle lenses. Affected by macroeconomic fluctuations in 2023, the market competition pattern became intense, product prices declined, and the company's traditional impact on business and mobile phone module performance was under pressure. The company is focusing on expanding business in the fields of automotive electronics and intelligent driving, focusing on developing high-value-added products such as in-vehicle displays, and continuously optimizing the product structure of mobile phone lenses and mobile phone video modules. The semi-annual report revealed that on the automotive side, the company continues to increase cooperation with overseas car company T, deepen strategic cooperation with internationally renowned premium automotive assistance safety solutions companies such as Mobileye and Nvidia, and expand the market share of automotive cameras in well-known European and American automotive electronics manufacturers Aptiv, Valeo, and Magna. The company attaches importance to cooperation with domestic premium automobile-assisted safe driving solution companies such as Horizon and Baidu, and expands the cooperation of vehicle cameras and video modules with well-known domestic terminal manufacturers such as NIO, BYD, and Geely. In terms of mobile phone business, the company continues to maintain cooperation with important mobile phone ODM customers such as Huaqin, Wentai, and Longqi to supply mobile phone manufacturers such as ZTE and Lenovo. The company takes advantage of the technical advantages of imitation glass lenses and prisms to actively develop and ship glass-plastic hybrid lenses and image modules, periscope lenses and image modules to increase the proportion of high-resolution lenses, image modules, and OIS optical image stabilization modules. With the expansion of the automotive business and the gradual recovery of consumer electronics, the company's revenue for the third quarter was 2.89 billion yuan, an increase of 28.9% over the previous month, and net profit was -49 million yuan, an improvement over the second quarter.
The business layout at home and abroad is progressing steadily, and the product structure is constantly being upgraded:
The company continues to promote the transformation of traditional business, adopts the development strategy of “concentrating resources to accelerate the development of the optical industry, steadily developing the display industry in various ways, and actively investing in cultivating new businesses and new industries” to actively optimize product layout and user structure. In terms of the automotive business, the company is continuously upgrading its products. Currently, the resolution of vehicle camera products covers 1M-8M. In the AR/VR industry, the company relies on the advantages of optical technology accumulated over many years and has mature key core technologies such as geometric waveguides, diffraction light waveguides, and folding optical path lenses. In terms of touch control business, the company is transforming into automotive screens and other fields, and the vehicle internationalization strategy is advancing in depth. The announcement revealed that the company plans to cooperate with Mexican company Prodensa to establish a North American plant, which is expected to shorten the delivery cycle for North American customers and gain more overseas market share.
Investment suggestions: We expect the company's revenue from 2023 to 2025 to be 10.434 billion yuan, 12.308 billion yuan, and 15.09 billion yuan respectively, and net profit of -52 million yuan, 251 million yuan, and 557 million yuan respectively, giving a price-earnings ratio of 54 times 2024, corresponding to the 12-month target price of 12.69 yuan, maintaining a “buy-A” investment rating.
Risk warning: industry prosperity falls short of expectations; product development falls short of expectations; market development falls short of expectations; and progress in foreign investment falls short of expectations.