Focus on the LED display control system, and revenue is growing steadily. Carite was founded in 2012, and its products expanded from LED display control systems to LED display control systems, video processing equipment, and cloud-connected players. The company's revenue and net profit have continued to grow since 2018. Revenue increased from 230 million yuan in 2018 to 680 million yuan in '22. CAGR was 31%, and net profit increased from 0.2 billion yuan in '18 to 130 million yuan in '22, with a CAGR of 53%. 23Q1-Q3 had revenue of 570 million yuan, an increase of 33.96% over the previous year, and net profit of 110 million yuan, an increase of 42.86% over the previous year. 23H1's overseas revenue was 57 million yuan, up 83.87% year on year, accounting for 16.1%, up 4.7 pct year on year, and overseas business grew rapidly.
The volume and price of LED display systems have risen sharply, and the market share of domestic manufacturers has increased rapidly. According to data from Nova Nebula's prospectus, LED shipments are expected to increase from 1 trillion units in 2020 to 10 trillion units in 2030. At the same time, the 5G+8K trend is expected to increase the value of a single card for LED display control devices. According to GGII data, China's LED display market is expected to grow from 63.5 billion yuan in '22 to 68.4 billion yuan in '23. In the future, LED display control systems are expected to continue the trend of rising volume and price, and the market will continue to expand. According to our company announcement, the revenue of Carite's LED display control system accounts for about 26.7% of total domestic revenue. Under the trend of further shifting of LED terminal production capacity to the local market, domestic manufacturers are expected to further increase their share in the global market, and the company is expected to benefit first as a leading domestic enterprise.
Equal emphasis is placed on technological upgrading and capacity expansion, and is deeply tied to leading customers. 1) Technology: With product technology research and development as its core task, the company has developed technologies such as rapid optical correction for large screens, fine adjustment of physical spacing for large screens, low latency processing of multi-channel ultra-8K videos, and virtual shooting XR, etc., and has successfully established itself at the forefront of the field of display control and video processing. 2) Production capacity: The company's capacity utilization rate and production and sales rate are close to saturation, and the production of LED display control systems and video processing equipment has been expanded through fund-raising projects. 3) Customers: With the technical advantages of the product, the company has established long-term cooperative relationships with well-known manufacturers in the LED display industry such as Qiangli Jucai, Riyadh, Zhouming Technology, Changchun Xida, and Planar.
Profit forecast and investment rating: The company's net profit from 2023-2025 is expected to be 1.98/300/448 million yuan, and the current market value corresponding to PE is 35.41/23.42/15.65 times, respectively, which is higher than the average valuation of comparable companies. Considering the company's more comprehensive business layout and technical advantages and production capacity expansion in the field of LED display control systems, we are optimistic that the company is expected to continue to increase performance along with the increase in LED screen shipments and the 5G+8K consumption upgrade trend. Give a certain valuation premium, cover for the first time, and give a “buy” rating.
Risk warning: risk of potential market competitors entering; risk of high customer concentration; risk of iterative product technology upgrades.