Incidents:
Jimi Technology released the 2023 performance report: In 2023, the company achieved revenue of 3,558 billion yuan, net profit of -15.74% year on year, -75.26% year on year, minus non-net profit of 72 million yuan, -83.80% year on year; of these, in the fourth quarter of 2023, the company achieved revenue of 1,136 billion yuan, -15.21% year on year, net profit of 38 million yuan, -77.95% year on year, minus net profit of 0.29 million yuan, -82.33% year on year.
Industry demand has declined, and company revenue has declined
Demand in the domestic smart projection market declined in 2023. Lotu data showed that in 2023, China's smart micro investment sales volume was -17.3% year-on-year to 10.37 billion yuan. As a result, Jimi's domestic sales declined year-on-year, putting pressure on the company's overall revenue. There are also structural opportunities in China's smart projection market in 2023. On the one hand, the proportion of 1LCD and cost performance ratio increased dramatically. On the other hand, household laser projection sales volume was +35.5%. In the future, Jimi is expected to seize smart projection market segmentation opportunities with multiple brands, multi-price layouts, and new laser products.
Domestic sales price adjustments put pressure on profitability
The company's gross margin declined year-on-year in 2023. It is expected to be mainly due to changes in the company's product structure and strong promotion of the company's main products during the promotion period, further compounding the necessary promotion and R&D expenses on the cost side. Looking at a single quarter, supported by factors such as income tax relief, the company's 2023Q4 net profit margin was -9.49pct to 3.34% year on year. Subsequent companies are expected to develop new products, expand overseas, dynamically adjust promotion efforts, and gradually restore profitability.
Share buyback announced, demonstrating management confidence
In February 2024, Jimi Technology announced that it plans to repurchase shares to implement equity incentives or employee stock ownership plans. The total repurchase capital is 80 to 160 million yuan (including range). The funding source is overfunded, and the repurchase price is no more than 134.74 yuan/share. Based on this estimate, the company is expected to repurchase 59.37-1187,500 shares, accounting for 0.85%-1.70% of the total share capital, demonstrating management confidence. We believe that the company is expected to return to growth in 2024 by leveraging underlying technological innovation and product innovation to meet the needs of consumers at home and abroad in different scenarios and price segments.
Profit Forecasts, Valuations, and Ratings
We expect the company's revenue for 2024-2025 to be 41.07 billion yuan and 4.751 billion yuan, respectively, with year-on-year growth rates of +16%/+16%, and net profit to mother of 241 million yuan and 268 million yuan respectively. The year-on-year growth rates are +94%/+11%, and EPS is 3.44 and 3.83 yuan respectively. In view of Jimi Technology's leading product strength, it is expected to meet demand in multiple scenarios and multiple prices, actively expand overseas channels, and announce repurchases, demonstrating management's confidence. We gave the company 27 times PE in 2024, with a target price of 92.93 yuan, maintaining a “buy” rating.
Risk warning: 1) Domestic and foreign demand falls short of expectations; 2) Raw material prices and exchange rates fluctuate greatly.