1. Deeply involved in the field of LED display control and video processing, the company's profitability is steadily improving. The company uses algorithms as the core, software and hardware as the carrier, deeply explores the field of LED display control and video processing, and gradually expands into the field of broadcasting. 1) From January to March 2023, the company achieved operating income of 555 million yuan, a year-on-year increase of 47.64%, and achieved net profit of 85 million yuan, an increase of 88.65% over the previous year. 2) The company's main products include LED display control systems, video processing systems, and cloud-based information publishing and management systems. Among them, LED display control systems accounted for 51.44% of total revenue in 2022, which is the main source of the company's revenue; in 2019-2022, the company's video processing system business developed rapidly, with a CAGR of 51.58%, which is expected to usher in significant growth.
2. Technological changes have opened up the market ceiling, and industry concentration is expected to further increase the recovery of the LED display industry. Technological changes are driving demand in emerging fields to highlight, and the LED display control field has good development prospects. 1) Affected by factors such as cost reduction, the LED display market penetration rate is expected to increase; 2) Small spacing, a sharp drop in mini LED display prices, and a rapid increase in product penetration rate will broaden downstream application scenarios, which will significantly drive demand for LED display control; 3) 5G+8K has become a development trend in the information industry, promoting the development of the UHD industry and providing a favorable environment for the development of the video processing equipment industry.
The company is in the middle of the LED display industry. The industry shows a strong pattern with a clear competitive pattern.
Video images show that the barriers in the control industry are high. The company is a leading enterprise in the industry. Together with Carlet and Chunzhong Technology, they are all representative manufacturers in the domestic industry segment, and the industry concentration is high.
3. The business is expected to continue to expand, and the company's development can be expected in the future
Businesses promote each other and develop collaboratively, and the company's performance is expected to grow rapidly. 1) LED display costs have been reduced, leading to diversified application scenarios for LED displays, and there is plenty of momentum for future growth. 2) From 2K to 8K, video clarity continues to improve. The LED display control system acts as a hub for the display to take off, helping the advent of the 8K era in terms of both hardware and software, and promote the increase in the scale of video processing systems. 3) Entering the era of LED cloud management and control, enabling customers to manage multiple displays remotely in real time. The hardware business has a high market share, paving the way for future cloud services as a new business growth point. 4) MLED continues to expand production, which is highly empowering the development of the company's MLED core testing equipment business.
5) MLED standardization is imminent. ASIC chips help improve standardization and reduce costs and energy consumption.
Investment advice: We predict that the company will achieve operating income of 30.41 billion, 43.49 billion yuan and 6.201 billion yuan in 2023-2025, and net profit to mother of 619, 9.33, and 1,327 billion yuan respectively. Using Carlet and Guangfeng Technology as comparable companies, we gave the company 32 times PE in 2024, with a target price of 581 yuan, and a corresponding valuation of 29.840 billion yuan.
Risk warning: raw material supply risk; risk of fund-raising project construction falling short of expectations; increased risk of market competition; risk of intellectual property protection; risk of large stock price fluctuations.