Incident: The company released its 2023 performance forecast. It is expected to achieve net profit of 39448.4 to 443.7945 million yuan, a year-on-year increase of 60%-80%, and deducted non-net profit of 35041.04-394.2117 million yuan, an increase of 60-80% over the previous year.
Strong brand strength drives continued growth in performance. The company's net profit for Q1-Q4 in 2023 was 0.76/0.98/1.03/1.18-167 million yuan, respectively, and the net profit after deducting non-net profit was 0.74/0.94/1.02/0.80-124 million yuan, respectively. The non-operating profit was mainly due to the company's sale of AUDEZE shares to Sony. The company deducted non-profit Q4 increased by about 14%-77% year-on-year compared to 23 million yuan. Overall, the company's Q4 profit was relatively high, the 2024 Spring Festival was late, downstream preparation time for the Spring Festival was delayed until January 2024, and the company's performance was strong in 2023, or more bonuses and some marketing expenses were calculated. The actual prosperity is expected to be better than the performance.
Continue to enrich the brand matrix and enter the hearing aid market. (1) The company has achieved good results in multi-brand operations, creating differentiated brands for different scenarios and user groups, such as the new young brand “Huazai”, the e-sports brand “HECATE”, and the cost-effective brand “Shengmai”, etc., and continuously expanding the market space. (2) The company has entered the hearing aid market. The company's newly launched in-ear, 32-channel, binaural noise reduction hearing aid has been certified as a medical device and is suitable for people with moderate/severe hearing loss. Hearing aid products are expected to serve more users in the future to open up new growth space.
Overseas markets have huge potential and are expected to grow rapidly. According to the company's 2023 mid-year report, about 20% of the company's revenue comes from overseas, and there is plenty of room for improvement at a lower rate. The company has stepped up efforts to expand overseas markets, set up product development and sales teams from different countries, and built a marketing network to successfully sell products to the world.
We expect the company's overseas market expansion rate to accelerate significantly in the future, and it is expected that overseas and domestic revenue will be comparable in the long run.
AI empowers intelligent assistant terminals and is expected to benefit greatly. At present, the conference summary The headphone market has opened up, and the integrated smart assistant market is emerging. As a scarce high-brand independent audio manufacturer in China, the company has advantages in using open source models or cooperating with large model manufacturers to launch smart assistant terminals. On January 8, 2024, the company answered questions about AI large model headsets on the investor interactive platform, saying that the work related to the new product is progressing smoothly. It is expected that along with the advancement of AI technology, future intelligent assistant products integrating software and hardware are expected to bring about an increase in demand and terminal value at the same time, which will greatly benefit the company.
Maintain an “Overweight” rating. We believe that the company is expected to become a core player in the smart assistant wave, greatly enjoy the dividends of AI development, adjust the company's 2023-2025 performance forecast to operating income of 26.25/31.03/36.69 billion yuan, net profit to mother of 427/5.37/ 686 million yuan, and maintain the “gain” rating.
Risk warning: Risk of AI technology falling short of expectations; risk of rising raw material prices and labor costs; risk of increased industry competition; macroeconomic risk.