Incident: The company announced its 2023 performance forecast. The company's 2023 performance loss was 75 million to 125 million, net profit before restructuring was 202 million yuan for the same period last year, and net profit to mother after restructuring was 284 million yuan. The first loss since the company went public, and the performance fell short of expectations.
The acquisition of Osram's DS-E business led to increased costs, and impairment of inventory and accounts receivable dragged down performance. The company acquired Osram's DS-E business in 2023 and merged in April 2023, but the increase in related expenses brought about by the asset acquisition put pressure on the company's performance in the short term. At the same time, the LED drive power industry faced adverse factors such as a slowdown in demand in 2023. The company reduced inventory and some accounts receivable due to prudential considerations, thus dragging down the performance of the whole year.
The LED drive power industry is at the bottom of the cycle, and the global layout awaits recovery dividends. Downstream LED drive power supply inventories in 2023 generally fell by 30%-40% compared to 2022, and the industry is gradually at the bottom of the cycle.
The company merged into Osram's DS-E business in April 2023, enriching its product matrix for medium- and low-power LED drive power supplies, while also entering more than 1,800 Osram DS-E customers in Europe and Asia, gradually improving its global layout. With the recovery in future demand in the LED drive power supply industry, the company is expected to benefit from the dividends brought by the recovery of the industry.
The new energy business is growing rapidly and is expected to create a second growth curve. The company's new energy business achieved revenue of more than 51 million yuan in the first half of 2023, an increase of 346.5% over the previous year. Revenue comes from new energy vehicle chargers, portable chargers and other charging products in the new energy sector. Looking at the new energy business, the new energy business is expected to grow rapidly throughout the year. During the reporting period, the company increased the capital of Xi'an Jingshi Electric Technology Co., Ltd. with its own capital of 27 million yuan, held 20% of Xi'an Jingshi's shares, and actively laid out photovoltaic energy storage-related businesses. It is expected to create new performance growth points in the future.
Profit forecasting and investment advice. Considering that the company merged with Osram's DS-E business in April 2023, the increase in related expenses brought pressure on the profit side and lowered the 2023-2025 profit forecast target. The company's net profit to mother for 2023-2025 is estimated to be -110 million, 210 million, and 270 million yuan, corresponding to EPS of -0.37 yuan, 0.70 yuan, and 0.89 yuan, respectively. Considering the easing of cost-side pressure on the company in 2024, operational improvements brought about by the recovery in industry demand, and the reduction in inventory and accounts receivable impairment expectations, the current stock price is only 11.0 times and 8.7 times PE in 2024 and 2025. Compared with the company's 2024 average PE, it maintains a “buy” rating.
Risk warning: macroeconomic downside risk; risk of industry demand recovery or falling short of expectations; overseas business risk; exchange risk.