Crystal Optoelectronics achieved operating income of 5,076 billion yuan in 2023, up 16.01% year on year, achieving net profit of 600 million yuan, up 4.15% year on year, and realized net profit deducted of 523 million yuan, up 2.72% year on year. Among them, Q4's main revenue for a single quarter was 1,527 million yuan, up 30.05% year on year; net profit from single quarter was 162 million yuan, up 68.83% year on year; performance exceeded expectations. The company continues to focus on miniature optical prism modules, automotive electronics continue to grow, and Android optical upgrades continue to accelerate. Along with continuous breakthroughs in underlying technologies such as AI, 5G, and optical imaging, the company insists on focusing on optical tracks, increasing the layout of smart cars and AR/VR industries to achieve steady development of basic operations.
Optical components business: Looking forward to optics as the focus of growth, and the component business took off for the second time. The miniature optical prism module project is the No. 1 project. After more than 1,000 days and nights of hard work, the company successfully achieved mass production in June 23, becoming the world's first supplier for mass production of quadruple reflective prism modules. The company has also achieved rapid climbing with comprehensive technology and large-scale production organization capabilities, demonstrating consumer-grade mass production capabilities. Miniature optical prisms have become the core business supporting the company's positive sales growth. The return of HW has enabled mobile phone manufacturers to further upgrade optics, and Crystal Optoelectronics will continue to benefit as a core supplier for Android.
Automotive electronics (AR+) business: The company shipped more than 200,000 HUD units in the full year of 2023, with ARHUD ranking first in the domestic market share. Last year, it successfully obtained Jaguar Land Rover's HUD project, becoming the first Chinese HUD Tier 1 company to enter the mainstream overseas vehicle brand. Entering a number of new OEMs such as Geely, Dongfeng Rantu, and Changan Mazda, and receiving more than 10 fixed projects, the company began a new curve of growth for the second time. Narrowband products have been mass-produced in the new field of automotive lidar, and have successfully obtained exclusive supply opportunities from several lidar manufacturers. The company has more than ten years of technical experience in the AR/VR field. Together with the technology company Lumus in Israel and Digilens in the US, they have formed an all-technology path layout of retractable, diffractive, reflective, and pancake, with the goal of becoming one of the core components, modules and solution providers in the metaverse optics industry.
Thin film optical panel business: increasing the share of large clients and expanding product categories, rapidly increasing the market share of the mobile phone business; maintaining steady growth in the watch cover business; and actively developing product applications in non-mobile phone fields such as vehicles, smart homes, and gaming offices.
Semiconductor optics business: The company continues to promote the development and marketing of various products such as lithography wafers, narrowband filters, DOE, and Diffusers, and some 3D core components have entered the supply chain of major customers. In 2023, new narrowband applications will continue to be expanded. Narrowband products have seized mass production opportunities from major domestic Android customers to achieve a 100% market share supply pattern; chip coating products have overcome technical problems such as lithography and coating, achieved major technological breakthroughs from glass coating to chip coating, and successfully completed market development, contributing considerable sales; and actively deployed new technologies in new fields such as automotive optoelectronics and AR/VR, and have achieved sample delivery and exclusive supply opportunities for some customers.
Profit forecast and investment suggestions: The company's business development is progressing smoothly. With the launch of new products and the gradual increase in market share, we expect the company to achieve revenue of 70.8/83.5/9.85 billion yuan in 2024/2026, up 39.4%/17.9%/18.0% year on year, and achieve net profit to mother of 8.0/10.0/ 1.18 billion yuan, up 33.5%/24.9%/18.2% year on year. The PE value is 25.8/20.6/17.5X, maintaining the “Highly Recommended” rating.
Risk warning: Downstream demand falls short of expectations, progress of new products from major customers falls short of expectations, and industry competition intensifies.