The company announced its 2023 results:
23Q4: Revenue of 1.39 billion yuan (+95%), attributable to mother of 420 million yuan (+13%), deducted not 390 million yuan (+6%).
Year 23: Revenue of $13.4 billion (+16%), net income of $1.28 billion (-15%), net of $1.23 billion (-13%).
Q4 High revenue and profit surpassed expectations. In addition, the company plans to pay a dividend of 0.6 yuan per share. Considering changes in share capital after the equity incentives are implemented, the corresponding actual dividend rate can reach 32.6%, a further increase from 30% in previous years.
In addition, on April 8, the company announced the 2024 stock options incentive plan. It plans to grant 26.66 million shares of stock options (accounting for 3.89% of the total share capital). The total number of incentive recipients is no more than 2154 people (including 5 directors and supervisors), and the exercise price of stock options is 26.52 yuan.
Revenue side: the core driver is the improvement of TV ODM
TV ODM: Marginal acceleration, H2/annual revenue was +58%/32% year-on-year respectively, with annual volume/price +37%/-4% year-on-year, respectively. The company's Q4 TV shipments reached a record high, and we expect Q4 shipments to drive revenue growth of 70% + year over year.
Intelligent interaction: Marginal improvement. H2/annual revenue was +7%/-9%, respectively. Among them, interactive tablets were still declining throughout the year, but experts showed that annual shipments were +174% year-on-year. The high increase in e-sports screens is expected to be the main driving force.
Innovative products: Revenue doubled, with annual revenue +129% year-on-year, of which volume/price ratio was 272%/-39%, respectively. The company first introduced a mobile smart screen in the industry in '23, and its volume is expected to drive high growth.
Profit side: The gross margin for the single quarter has improved month-on-month
The gross and net margin for the whole year was -3.3/-3.6 pct year on year, and the gross margin for Q4 was 18.2%, and -8.9pct year on year, but there was a marked improvement of +2.1pct month-on-month. Under cost reduction and efficiency, the Q4 net margin was better than the gross profit margin. With the TV ODM business price increase in December and the restoration of the interactive business in '24, revenue and profit are expected to usher in an upward cycle in '24.
Excluding the impact of exchange and subsidies in '22 (about $400 million in total) and taking into account the equity incentive costs ($90 million in '23/$0.2 billion in '22), the actual net profit for '23 was better than in '22, and the net interest rate for '23 stabilized at 9.5%.
New equity incentives reaffirm growth
The company's revenue target value for the new phase of equity incentives for 24-26 is $151/174/18.8 billion (YOY +12%/15%/8%), and the trigger value is $144/163/17.5 billion (YOY +7%/13%/7%). The unlocking conditions were higher than market expectations. The 24-26 revenue target and trigger values corresponded to CAGR +11.6%/10.2% respectively, showing continued growth over the next 3 years.
Investment advice:
Our point of view:
The company experienced 23 years of pressure on TV profits and cyclical troughs in interactive tablets, and is now at an inflection point in business. The recovery pace of the two core businesses is the inflection point of 23Q4 TV improvement +24. In addition, the innovative business is expected to maintain a high growth rate of +50% or more in 24, and the company's business cycle+structural optimization logic continues.
Profit forecast: In 2024-2026, we expect the company to achieve revenue of 153/174/18.9 billion yuan, +14%/+9%; net profit to mother of 15/18/1.9 billion yuan, +15%/+19%/+10%; current stock price corresponding to PE is 12/10/9 X and dividend rate will increase. Performance and valuation will be upward elastic, and maintain a “buy” rating.
Risk warning
Industry sentiment fluctuates, industry competition intensifies, and panel costs fluctuate greatly.