The company predicts a 75.26% year-on-year decline in profit in 2023
The company predicts 2023 results: 1) Revenue of 3,558 million yuan, -15.74% YoY; net profit to mother of 124 million yuan, -75.26% YoY. 2) Corresponding to 4Q23, the company achieved revenue of 1,136 billion yuan, -15.2% year-on-year; net profit to mother was 38 million yuan, -77.9% year-on-year. 3) The company's performance was higher than our expectations. Mainly due to the company's investment in control expenses, it maintained a small profit in the fourth quarter.
Key points of interest
Subsidy promotions seize share, and the decline in average prices dragged down revenue: 1) According to Jiuqian data, retail sales of 4Q23 online (Tmall + JD) projectors were -29% year-on-year, further expanding compared with the 3Q23 market decline, and no inflection point has yet been seen. 2) In September 2023, Jimi plans to launch a 100 million yuan subsidy to cope with weak demand and market competition. According to data from JD's official flagship store, during the “Double 11" period in 2023, the price of the Jimi Z series and H series flagship models dropped further by 10% to 25% compared to the “618 Big Sale”, and even more compared to previous daily prices. 3) In September 2023, Jimi launched an iterative new product of the low-end Play series, which became a hot seller on the Douyin platform. Compared with LCD products priced at 1500 to 2000 yuan, it is highly competitive, driving the Play Series sales share to increase. 4) Factors such as subsidies for main models and an increase in the share of low-end models led to a marked decline in the average sales price of the company, which dragged down revenue performance.
Continued overseas expansion, European and American market channel breakthroughs: 1) In April 2022, Jimi acquired Japan's Aladdin projector lamp business and integrated its own brand with Aladdin's business team. It is still in the adjustment stage in the short term, causing the Japanese market's performance to fall short of expectations. 2) The European and American markets continue to promote channel construction. 2H23 initially entered the Bestbuy retail channel in North America. By the end of 2023, it had laid out consumer electronics retail channels such as MediaMarkt and Saturn in Europe. 3) According to Lotu Technology, the 1-3Q23 Ximi share in the global projector market (including commercial use) reached 5.1%, ranking second only to Epson.
Driven by R&D innovation, new products continue to break through: 1) Jimi always attaches importance to technological innovation research and development, and has high quality requirements, and the R&D cost rate is higher than that of the industry. 2021/2022/1Q23/2Q23/3Q23 The company's R&D expenses rate is 6.5%/8.9%/11.3%/14.2%/11.9%. 2) Since 2023, the company has been promoting new products at an accelerated pace. It has successively launched 4K mixed light, 4K three-color lasers, and new home aesthetics products. The high initial investment in R&D is gradually being implemented. 3) We believe that market demand is still under pressure in the short term, but the company continues to improve in terms of products, channels, and marketing, and the promotion of globalization is expected to drive growth in the medium to long term.
Profit forecasting and valuation
Due to the company's better control of 4Q23 expenses, we raised our 2023 profit forecast by 19% to 124 million yuan; however, considering that demand in the domestic projection market continues to weaken and we have not seen a clear inflection point, we lowered our 2024/2025 profit forecast by 4%/4% to 328 million yuan/401 million yuan. The current stock price corresponds to 2024/2025 18.2x/14.9x P/E. Maintaining an outperforming industry rating, the target price was lowered by 9% to 120 yuan, corresponding to 2024/2025 25.6x/20.9x P/E, with 41% upward space.
risks
Competition increases risk; risk of new product sales falling short of expectations; risk of fluctuating raw material prices.