Report summary
Incidents:
The company released its 2023 annual report. In 2023, the company achieved operating income of 5,076 billion yuan, +16.01% year-on-year; realized net profit attributable to shareholders of listed companies of 600 million yuan, +4.15% year-on-year. In the fourth quarter of 2023, the company achieved operating income of 1,527 billion yuan, +30.05% year over year before the 2022 adjustment; net profit attributable to shareholders of listed companies was 162 million yuan, and +69.10% year over year before the 2022 adjustment.
Consumer electronics, automotive optics, and metaverse layouts are beginning to bear fruit, and the company's overall performance has improved steadily.
The company has been deeply involved in the optical industry for more than 20 years. It has laid out product business around the three major application scenarios of consumer electronics, automotive optoelectronics, and metaverse, and has built five major business segments: optical components, thin film optical panels, semiconductor optics, automotive electronics (AR+), and reflective materials, and has expanded the product ecosystem from single-component components to components, modules and solutions. In 2023, the company achieved operating income of 5,076 billion yuan, +16.01% year-on-year; realized net profit attributable to shareholders of listed companies of 600 million yuan, +4.15% year-on-year. In the fourth quarter of 2023, mass production of new products successfully entered the peak period. The company achieved operating income of 1,527 billion yuan, +30.05% year over year before the 2022 adjustment; net profit attributable to shareholders of listed companies was 162 million yuan, and +69.10% compared to the 2022 adjusted data. In 2023, the company's sales/management/finance/R&D expense rates were 1.40% 6/ 6.97%/-1.38%/8.35%/respectively. The total cost rate for the period increased by 1.1 pct year-on-year, mainly due to the increase in R&D expenses.
Optical components and thin-film optical panels achieved year-on-year growth in revenue and gross margin, while automotive electronics (AR+) revenue also increased by 54.39%.
The company's operating income and gross margin of the optical components and thin film panel segments both achieved positive year-on-year growth, and the revenue of the automotive electronics (AR+) and reflective materials sectors increased. Optical components: As the company's largest business, thanks to the smooth mass production of miniature prism module products and the increase in the penetration rate of absorption and reflection composite filters in Android systems, the operating revenue in 2023 was 2,446 billion yuan, +21.11% year over year, and gross margin was 30.66%, +4.50 pct year over year. Thin film optical panels: As market share and yield continued to increase, the sector grew into a new “ballast stone”. In 2023, the company achieved operating revenue of 1,849 billion yuan, +17.77% year on year, gross margin of 25.48%, +3.37pct. Automotive electronics (AR+): Fist products AR- ranked as the domestic share ratio of HUD shipments-, with revenue of 291 million yuan, a sharp increase of 54.39% year on year. Due to the gradual transition of the revenue structure from components to in-vehicle modules, gross margin fell 25.90 pct to 11.72% year on year. Reflective materials: Operating revenue was 287 million yuan, up 4.12% year on year. Due to increased amortization of production, relocation and commissioning, gross margin fell 5.96 pct to 29.22% 0 semiconductor optics: Due to changes in downstream terminal solutions, operating income was 108 million yuan, a sharp drop of 62.46% year on year, and gross margin fell 4.94 pcts year on year to 35.32% year on year.
The successful mass production of miniature optical prism modules created a performance growth point and consolidated the cornerstone of the consumer electronics business.
The company achieved mass production of miniature optical prism modules in June 2023. Crystal Optoelectronics became the world's first supplier for mass production of quadruple reflective prism modules, successfully transforming from a single component manufacturer to a complex optical module and solution provider. The rapid rise in mass production strength made the miniature optical prism module, a new product rapidly rising to a core growth point for the company's performance, and cooperation with major North American customers also reached a new level. The market promotion results of absorption and reflection composite filters are obvious. They have been successfully introduced into all mainstream terminals in the domestic market, and the domestic market share has increased dramatically.
AR-HUD leads the domestic market share, the customer structure continues to be optimized, and the automotive optoelectronics sector opens up a new pattern.
The company used new energy vehicles to develop Dongfeng. Through three years of business development and accumulation, the automotive optoelectronics sector became the second growth curve for the company's development and achieved an advantageous strategic position within the industry. The company's HUD products are shipped more than 200,000 units throughout the year, with AR-HUD ranking first in the domestic market share-. In 2023, it successfully obtained Jaguar Land Rover's HUD project and became the first Chinese HudTierL company to enter the mainstream overseas vehicle brand. It has joined many new OEMs such as Geely, Dongfeng Rantu, and Changan Mazda, and has received more than ten designated projects. In addition to HUD, a complete module-integrated solution, the company also supplies optical components in HUD, lidar, and cameras, etc., which also supports gross margin pressure in the automotive optical sector
Investment advice: We believe that the company has focused on the optical circuit for more than 20 years and has formed a strategic layout in consumer electronics, automotive optics, and the metaverse. The company's leading absorption and reflection composite filter product, products such as Prism, are expected to gain business opportunities in the transformation and upgrading of high-end Android smartphones. The flagship HUD product will continue to consolidate its dominant position in the industry, and AR/VR revolves around industry-leading development projects. We forecast 2024-2026 revenue of 64.5/77.6/9.01 billion yuan, net profit to mother of 7.5/9.2/1.08 billion yuan, corresponding to EPS of 0.54/0.66/0.7 yuan, corresponding to current stock price PE of 27/22/19 times, maintaining a “buy” rating.
Risk warning: risk of macroeconomic fluctuations, risk of increased industry competition, risk of downstream terminal demand falling short of expectations, risk of R&D progress falling short of expectations, etc.