Event: The company released its report for the third quarter of 2023. In the first three quarters of 2023, the company achieved revenue of 6.296 billion yuan, an increase of 21.59% over the previous year; realized net profit of 306 million yuan, a year-on-year decrease of 47.60%; and realized net profit of 222 million yuan, a year-on-year decrease of 58.14%. On a quarterly basis, in 2023, Q3 achieved revenue of 2,921 billion yuan, a year-on-year increase of 48.66%, a year-on-month increase of 53.55%; realized net profit of 86 million yuan, a year-on-year decrease of 60.67%, a year-on-year decrease of 25.58%; and realized a net profit of 69 million yuan, a year-on-year decrease of 63.26%, a decrease of 2.24% over the previous year.
The expansion of the vehicle electronics business contributed to revenue growth, while waiting for the market to recover and profit recovery: In Q3 of 2023, the company's automotive electronics business revenue increased compared to the same period last year, but due to the market environment and competition, gross margin declined.
In 2023, Q3's gross margin was 10.17%, down 6.21pcts year on year; net profit margin was 3.81%, down 7.73 pcts year on year. In terms of expenses, the company's sales, management, R&D, and financial expenses in the first three quarters of 2023 were 0.77%/2.30%/3.42%/-0.42%, respectively. The year-on-year changes were -0.59/-0.18/-1.39/+1.14pcts, respectively. Among them, the company's financial expenses rate increased year-on-year in the first three quarters, mainly due to increased interest expenses and reduced exchange earnings in the first three quarters of 23 years.
The number of VR modules continues to increase, and the UTG business momentum is strong: The company's VR display module business started early. Through self-developed automatic visual inspection technology for AOI cameras, AOI CCD pixels can reach 120M, achieving automatic 0.07mm detection of 3D glasses in virtual brightness comparison detection and control. Currently, the company is providing Quest3's VR headset module products to VR flagship customers in North America; at the same time, the company is also providing VR headsets for domestic VR giants, and on this basis, it is speeding up the development of high-generation VR headsets equipped with microLEDs to accelerate production capacity expansion according to customer needs. On April 20, 2023, the Vivo x Flip equipped with the UTG product of Dongxin Optoelectronics, a subsidiary of the company, was launched; on August 29, 2023, the OPPO Find N3 Flip, which is equipped with a UTG product exclusive to Dongxin Optoelectronics, was launched. At present, Dongxin Optoelectronics has established deep business partnerships with domestic and foreign mobile phone brand giants, and has received project targets from major domestic brand customers. This year, it will provide UTG products for more than one million devices to customers.
The business layout caters to industry trends, and is optimistic about the broad space of electronic paper+vehicle electronics: According to the company's 2023 interim report, the China Industry and Information Technology Work Conference revealed the key tasks of the year, and electronic paper is ranked in the forward-looking display industry layout that needs to be strengthened; at the same time, since carbon peak and carbon neutrality were included in the “Report on the Work of the Government”, e-paper products have been recognized as one of the excellent solutions under the global “double carbon” goal. According to the company report, according to RUNTO Technology (RUNTO) “Global ePaper Market Analysis Quarterly Report (Global ePaper Market Analysis Quarterly Report)”, global e-paper module shipments in 2022 were 260 million sheets.
The year-on-year increase was 23%; at the same time, the application and promotion of electronic paper labels in mainland China is still in its infancy.
The penetration rate is less than 10%. In order to cater to the development trend of low-carbon technology, the company set up a fifth division dedicated to
This includes businesses such as electronic paper and X-Ray drive boards. According to the company's 2022 annual report, according to Omdia
Testing, along with the intelligence and visualization of automobiles becoming a new development trend and the rapid spread of new energy vehicles,
By 2026, global automotive display shipments will reach 240 million units. Currently, the company is already with Chery
Establish a long-term and stable cooperative relationship to provide covers, touch controls, display modules, etc. for many Chery models
Products (including not limited to Jetu X70, Arrizo 8, Tiggo 5, Tiggo 7, Tiggo 8, Tiggo 8, Tiggo 8 International
edition, Tiggo 9, etc.); at the same time, the company is a supplier of the Celis S series and M series, and is recommended for them
Central control screen assembly for cover, fit and backlight assembly.
Lower the profit forecast and maintain the “increase in holdings” rating: the company's main business includes automotive electronics business and consumption
Electronics business. Among them, the company's automotive electronics business includes: vehicle sensors, vehicle sensor modules,
Vehicle cover (2D and 3D), vehicle display module, vehicle screen module (including central control screen, rearview mirror,
Instrument panels, B-pillars, head-up displays, front and front passenger displays, armrest screens, etc.); the consumer electronics business includes:
Ultra-thin LCD panel thinning business, ultra-thin glass cover (UTG, UFG) business, ITO conductive glass
Lihe VR display module, smart wearable display module, mobile phone display module, NB and PAD display module
Smart hardware products such as groups, light guide boards, and electronic paper drive boards. H1 in 2023, the company is in automotive electronics
Leading positions in business areas such as electronics and consumer electronics have been established and further consolidated. The future will benefit from consumption
With the recovery in demand for electronic devices, the increase in the use of automotive displays, and the continued development of the e-paper market, the company is hopeful
Gradually fix performance and further open up profit margins. Combine the profit situation of the three quarterly reports and consider the new
Continued investment in the business has put some pressure on the profit side, so the profit forecast was lowered, and the company is expected
Net profit for 2023-2025 was 621 million yuan, 765 million yuan, and 948 million yuan, respectively, EPS
It's 0.25 yuan, 0.31 yuan, and 0.39 yuan. PE is 29X, 23X, and 19X, respectively.
Risk warning: risk of macroeconomic fluctuations, exchange rate risk, risk of technology iteration, risk of increased competition.