Incident: The company released its 23-year performance report, achieving revenue of 2.22 billion yuan, -12.77% year-on-year; net profit to mother of 102 million yuan, -14.63% year-on-year. Among them, 23Q4 achieved revenue of 570 million yuan, or -14.9% year on year; realized net profit to mother of -0.27 million yuan, or -194.7% year-on-year.

On the revenue side, due to short-term fluctuations in the consumer electronics market, household core device business and C-side product revenue declined. By business, the company still has some businesses that have achieved good results. The company's automotive optics business has received a number of high-quality front-mount targets, and in December 2023, the first fixed-point model, the Qunjie M9, was officially launched. The domestic film market is showing a steady positive trend, promoting the high-quality development of the company's cinema core device business. In '23, the company's cinema projection service business achieved operating revenue of 369 million yuan, an increase of 37.24% over the previous year; the company continued to increase the number of ALPD laser source projection solutions installed. As of December 31, 2023, the number of ALPD laser source projection solutions installed in China had exceeded 29,500 sets.

On the profit side, in order to further maintain the company's technological leadership in the field of laser displays and enhance its core competitiveness, the company continues to increase R&D investment in growing businesses such as automotive optics, increase research on key core technologies and core components, introduce outstanding R&D personnel, and purchase R&D equipment and facilities. As a result, R&D expenses have increased year-on-year. Furthermore, considering factors such as rapid iteration of consumer electronics, the company made preliminary estimates for inventory price reduction calculations, and calculated that inventory price drop losses increased year-on-year. The performance losses of the companies participating in the company's foreign investment increased further in '23, leading to a year-on-year increase in investment losses in 2023. At the same time, this long-term equity investment test showed signs of impairment, and impairment losses are expected to be calculated, which led to a year-on-year decline in expected performance for the whole year.

Investment advice: The company is a leading enterprise in the field of laser display. ALPD technology is unique and has deep barriers. The company's B-side business has continued to recover since 23 years, while the automotive business continues to expand, and it is expected to create a new growth curve in the future. According to the company's performance report, we have appropriately increased investment in R&D expenses. The company's net profit for 23-25 is estimated to be 1.02/1.2/143 million yuan (previous value 1.59/306/362 million yuan), respectively, and the corresponding PE is 87x/74x/62x, respectively, maintaining a “buy” rating.

Risk warning: The amount of laser micro launches falls short of the expected risk, the recovery of the cinema business falls short of the expected risk, the development of customers in the automotive sector falls short of the expected risk, and the risk of iteration of the new technology path. The express report data is only preliminary accounting data. The detailed and accurate financial data is subject to the audited 2023 annual report officially disclosed by the company.