Matters:

Company announcement: The company plans to transfer 51% of the shares of the wholly-owned subsidiary Hong Kong Guangfeng to the wholly-owned company LONG PINE, which is the actual controller of the company. After the transfer, Hong Kong Guangfeng will no longer be included in the scope of the company's consolidated statements. The transfer is mainly to reduce the uncertain impact that participating company GDC Technology Limited may have on the company's development. Hong Kong Guangfeng holds 44% of GDC's shares, while GDC has continued to lose money since 2022, losing 26.9 million yuan in 2023. The consideration for this transaction was 51% of the book value of Hong Kong Guangfeng's long-term equity investment in GDC, or US$1.01 million.

Guoxin Home Appliance's opinion: 1) The company's transfer of shares in Hong Kong Guangfeng will help reduce the uncertainty brought by GDC to the company's development, optimize the company's asset structure and cash flow, and accelerate the company's development in emerging businesses such as automotive; 2) The company's automotive business has obtained 6 fixed points. Among them, Wanjie M9 was launched in December 2023 and entered the mass production and delivery stage. It is reported that the current number has exceeded 70,000, and the April delivery volume is expected to be 15,000 units. In the future, it is expected that the remaining fixed sites will also be mass-produced and delivered one after another, injecting new growth points into the company; 3) The company's B-side business will usher in a good recovery, consolidating the company's profit base: the cinema rental business is expected to achieve good growth, and the exclusive display business is expected to maintain steady growth; the C-end home projection business is affected by the industry, and the company is actively adjusting. Xiaoming's LCD projection performance is outstanding. It is expected that this year, it is expected that losses will be drastically reduced, optimized fundamentals, and achieved a steady recovery in business. 4) The company's laser display technology is leading the world, and the B-side business has achieved a good recovery; the company's smart cockpit business has formed a strong industry recognition, popularized consumer market education, and formed the company's rich experience in smart cockpits, and the company also has a strong leading edge in terms of fixed points; the company also has mature product solutions and original technical solutions for headlights and AR-HUD, and the automotive business is expected to create a second growth curve. Considering the competitive situation in the home projection industry and the company's strong investment in the automotive sector, the profit forecast is adjusted. The company's net profit for 2023-2025 is expected to be 1.0/1.7/30 billion (previous value was 1.6/2.4/40 million), with a growth rate of -15%/+66%/+76%, corresponding to PE = 88/53/30x, maintaining a “buy” rating. 5) Risk warning: industry competition intensifies; downstream customer expansion falls short of expectations; industry demand recovery falls short of expectations.