Incident: On January 31, the company issued the “Notice on the Plan to Repurchase Shares through Centralized Auction Transactions”. It plans to use centralized bidding transactions to repurchase some public shares with its own funds for equity incentives or employee stock ownership plans.
The proposed share repurchase shows the company's confidence in long-term development. On January 31, the company's current repurchase plan was approved by the board of directors. It plans to use the company's own funds to buy back the company's shares from the secondary market using centralized bidding transactions. The proposed repurchase price is no more than 30 yuan/share. The total repurchase amount is 20-40 million yuan, and the repurchase period is within 12 months after January 31. The repurchased shares are used for equity incentives or employee stock ownership plans. If not used up within 36 months after the repurchase is completed, they will be cancelled in accordance with regulations. We believe that this repurchase plan shows the company's confidence in future development prospects and high recognition of the company's value, and is conducive to safeguarding the interests of investors and enhancing investor confidence. Furthermore, the repurchase of shares to implement equity incentives or employee stock ownership plans will help the company establish a complete long-term incentive mechanism, fully mobilize the enthusiasm of the core team, enhance the company's cohesion and competitiveness, and promote the company's long-term sustainable development.
Self-developed chip streaming has been completed, and I am optimistic about the company's long-term development opportunities. According to the company's interactive communication on January 9, 2024, the company's self-developed professional audio and video processing ASIC chip was delivered to the fab in August 2023. At the end of December 2023, the company successfully received the sample and is undergoing related testing. We believe that the progress of the company's self-developed chips is in line with expectations and is expected to further enhance the competitiveness of the company's products, meet the autonomous and controllable needs of Party, government, and military customers. At the same time, it can also drastically reduce the company's chip procurement costs and enhance the company's profitability. In addition, according to the company's interactive exchange on September 7, 2023, the company's self-developed chips will be put on the market in addition to meeting the needs of its own products on priority. The diversification of product application scenarios is expected to bring new growth to the company and help long-term performance development.
With the layout of new tracks such as XR, products and application fields continue to expand. In addition to traditional business, the company is committed to expanding new tracks. Relying on years of technology accumulation, the company has broken through core technologies such as next-generation XR digital interaction and AR augmented reality, which can enable the integration of new scenarios such as rendering and perceptual interaction. According to the company's 2023 annual report, the two XR digital products developed by the company, X-shadow and Pandora, combine key AR reality enhancement technology, XR digital interaction technology, and AI intelligent scene recognition technology, and won the Metaverse VR/AR/MR/XR Leading Enterprise Award, the Metaverse VR/AR/MR/XR Excellent Hardware Award, the Metaverse Interactive Technology Award, and the Outstanding Digital Equipment Product Award.
Profit forecast and investment rating: The company's net profit for 2023-2025 is estimated to be 0.41/0.93/128 million yuan. The current stock price corresponds to PE of 69/30/22 times, respectively. We are optimistic about the company's long-term steady development and maintain a “buy” rating.
Risk warning: downstream demand falls short of expectations; product development progress falls short of expectations; raw material prices fluctuate; risk of macroeconomic fluctuations.