Description of the event
The company released the 2023 three-quarter report. 2023Q1-3 achieved revenue of 568 million yuan, a year-on-year increase of 33.9%; realized net profit of 110 million yuan, a year-on-year increase of 42.5%; realized net profit of 83 million yuan, a year-on-year increase of 21.9%; achieved net profit of 215 million yuan, a year-on-year increase of 39.9%; and realized net profit of 0.4 billion yuan, a year-on-year increase of 68.7% in the third quarter.
Incident comments
Revenue is growing rapidly, and LED is growing against the trend against the backdrop of a sluggish economy. Judging from the Q3 financial report, although the revenue growth rate of downstream LED screen manufacturers is low due to various factors such as declining real estate commencement and low business travel popularity (for example, the 2023Q1-3 revenue of Riyadh and Chaoming Technology increased 4.33%/3.12% year on year respectively), Carlet still relied on its good market position to achieve a 33.9% year-on-year increase in 2023Q1-3 revenue, far exceeding the revenue growth rate of downstream customers.
The share of video processing equipment continues to rise, and gross margin is rising rapidly. The gross margin of 2023Q3 reached 47.17%, up 6.07pct from 2022Q3 gross margin and 2.2pct month-on-month increase from 2023H1 gross margin. The increase in gross margin comes, on the one hand, from the rapid increase in the share of high-margin video processing equipment (2023H1 gross profit margin of 62.55%) in the context of increasing LED display requirements, and on the other hand, from the increase in gross margin of video processing equipment itself in the “2K-4K-8K” evolution path (according to 2023H1 data, the gross margin of video processors increased by about 2 pct compared to the same period last year).
Expenses are continuously invested to ensure lasting growth in performance. At the cost level, the company invested heavily in channel construction and market share competition (especially overseas) in 2023. 23Q1-3 sales expenses reached 81 million yuan, an increase of 109.93% over the previous year. Furthermore, considering the continuous increase in video processing equipment requirements for LED displays, the company's Q1-3 R&D expenses reached 72 million yuan, an increase of 57.06% over the previous year. The current large investment is a stable guarantee for high performance in the future. With the subsequent decline in cost growth, there is still plenty of room for profit.
At the balance sheet level, the company currently has sufficient cash assets. The sum of monetary capital and transactional financial assets has reached 1.77 billion yuan. Sufficient cash flow will help the company accelerate progress in expanding sales channels and hiring high-end talents, and will also help the company expand its business scale in the subsequent operation process.
Risk warning
1. Overseas market share expansion falls short of expectations;
2. Product iteration falls short of expectations.