1. The company uses AI to create a differentiated competitive advantage and launch a new growth model. The company established an integrated optical display solution with LED ultra-high-definition display as the lead and content-driven as the core, integrating “hardware+system+software+content+interaction”. The company took the lead in laying out digital content production and IP construction based on LED application scenario requirements, from existing hardware display products, software technology self-research, digital content accumulation, to integrated “hardware+software+content” solutions for card slots, increasing the added value of the company's products and building a new engine for the company's business development.

2. The company accounts for a high share of overseas exports, and is optimistic about benefiting from exports to achieve rapid growth 1) Overseas business revenue and gross profit are both growing, and overseas market demand is expected to pick up in the future. In 2022, the company's share of overseas business revenue increased sharply to 57.52%, and the overseas share is expected to continue in 2023. The gross margin of overseas operations also increased, from 32.34% in 2021 to 34.27%, and 2023H1 to 38.68%. In the past two years, with the early normalization of overseas economies and markets, the rapidly growing market demand for the LED display business has been effectively released, and the popularity of overseas markets is expected to continue in the future; 2) As overseas demand picks up, North America will usher in an inflection point in inventory replenishment. The company accounts for a high proportion of overseas business, with the North American market as the main part. The economic recovery trend in developed economies such as the US has exceeded market expectations, and the recovery in overseas demand will drive domestic export growth.

3. The development of multiple application scenarios for LED displays is expected to usher in a new incremental market. With the advancement of technology, the company's LED display applications are used in various emerging scenarios such as naked eye 3D, XR virtual shooting, all-in-one conference machines, and digital virtual humans, which is expected to bring about a new level of growth. 1) XR virtual shooting: The company has a strong first-mover advantage in the field of XR virtual production, and is gradually deriving successful experiences from abroad into the domestic market. 2) Glasses-free 3D: The linkage effect between the company's naked eye 3D content ideas and LED display sales has been enhanced. 3) LED all-in-one conference machine: In the field of smart conferencing, Logitech and Zhou Ming have established a good ecological partnership. The combination of Zhouming Technology's software and hardware and Logitech's full-scene product coverage will bring users a new smart conference experience and visual vibrations. 4) Virtual digital person: Qi Xiaoyi, the first naked eye 3D digital virtual person in the LED industry created by the company, sparked a boom. 5) LED movie screen: The company has a long history of layout and deep cultivation in the field of LED movie screens. The dual strength of technology and market will usher in a new growth point.

Investment advice: The company's revenue for 2023-2025 is estimated to be $7.359 billion, $8.168 billion, and $9.394 billion, respectively, and net profit to mother of $154 million, $601 million, and $821 million respectively. The company was given a “buy” rating of 25 PE in 2024, corresponding to a market value of 15 billion yuan and a target price of 13.71 yuan.

Risk warning: risk of asset impairment, risk of falling overseas demand, risk of technological innovation, risk of exchange rate fluctuations, risk of increased market competition, risk of rising raw materials, risk of intellectual property protection.