Incident: The company released its 2023 performance forecast on January 8. It is expected to achieve net profit of 310-350 million yuan in 2023, an increase of 52.70%-72.40% year on year; it is expected to deduct non-net profit of 2.72 to 312 million yuan, an increase of 67.84%-92.56% year on year. On a quarterly basis, in Q4 2023, the company expects to achieve net profit of 0.91 to 131 million yuan, up 1.33%-46.09% year on year, up 18.23%-70.46% month on month; it is expected to deduct non-net profit of 0.78 to 118 million yuan, changing -8.45% year on year to +38.45%, up 17.57%-77.59% month on month.

New products and market expansion helped growth. In 2023, the company achieved a high year-on-year increase of about 5.296 billion yuan in tax-inclusive contracts, up about 51% year on year; expected to achieve operating income of about 4,045 billion yuan, up about 45% year on year; expected to achieve net profit of 310-350 million yuan, up 52.70%-72.40% year on year; expected to deduct non-net profit of 2.7 to 312 million yuan, up 67.84%-92.56% year on year. The company's performance in 2023 is expected to increase year-on-year. The main reason is that the company grasps opportunities for market demand recovery, strengthens domestic and foreign market expansion efforts, and the rapid increase in contract amounts drives rapid growth in the company's revenue; second, the company attaches importance to product research and development, establishes a perfect R&D system and R&D team, and continues to lay out cutting-edge technology, and the launch of new products supports performance growth.

Adhere to both internal and external attacks, and clear development strategy goals: The company issued an outline of the development strategy plan on January 8, which includes: 1) Improving the sales network and consolidating the global layout. The company's products have been exported to more than 140 countries and regions, including America, Europe, Australia, Asia and Africa. In the future, the company will further enhance its sales network coverage in international and domestic markets, and broaden commercial channels through various models such as direct sales to major customers, channel distribution, and vertical industry sales; 2) Strengthen scientific research and innovation efforts and enrich the product portfolio. The company actively lays out cutting-edge technologies such as Micro LED and invests in technological innovation, industrial design, process manufacturing, etc. In the future, the company will have a richer product portfolio and more flexible delivery resources to meet diverse customer needs at multiple levels. The company has signed contracts of about 5.3 billion yuan in 2023, and strives to reach 8 billion yuan in 2024 and 10 billion yuan in 2025. We believe that based on the current development situation, the company has formulated a more clear business development program and target guidelines, which will help the company to actively develop its global genes and sound business foundation, ensure the continuous commercial competitiveness of the company's products, and ensure the long-term stable development of the company.

Released a convertible bond plan to increase LED production capacity expansion+business expansion: According to the Jibang Consulting report, the global LED display market will continue to grow in 2022 and 2023, and the global LED display market will reach 7.564 billion US dollars in 2023, an increase of 7.86% over the previous year; it is expected that by 2025, the global market size will reach 10.921 billion US dollars. In November 2023, the company announced a convertible bond plan. It plans to raise no more than 589.2093 million yuan in capital for: 1) the intelligent manufacturing base construction project, with a total investment of 261.4418 million yuan. After delivery, it will add 96,500 square meters of LED display production capacity. 2) The Abbison (Huizhou) R&D center project has a total investment of 149.2379 million yuan. It is intended to continue to enhance the company's technical reserves by building a new R&D laboratory, purchasing advanced R&D software and hardware equipment, and introducing outstanding R&D personnel to research and test innovative product technology and cutting-edge technology in the LED display field. 3) The global market expansion and marketing service network construction project has a total investment of 17,85296 million yuan to enhance the company's own brand product promotion efforts by establishing and upgrading marketing service outlets at home and abroad, broaden the company's brand channels, and enhance the company's brand influence. After the completion of this fund-raising investment project, it will effectively raise the company's production scale level, enhance the company's product innovation and R&D capabilities, improve marketing network construction, and promote the company's sustainable development.

Maintaining the “gain” rating: The company will continue to focus on the LED large screen business, further cultivate vertical market segmentation, and form a business combination model combining international and domestic dual circulation, direct sales and distribution, and multi-brand linkage.

The company's internal and external business complement each other, and the management foundation is solid. It has returned to the fast track of rapid development, and all operating indicators are showing a positive trend. We estimate that the company's net profit for 2023-2025 will be 324 million yuan, 429 million yuan, and 568 million yuan, EPS 0.89 yuan, 1.18 yuan, and 1.56 yuan respectively, and PE 17X, 13X, and 10X respectively.

Risk warning: technological innovation risk, business globalization risk, exchange rate fluctuation risk, new business development falling short of expectations.