Incidents:
On April 13, the company released the 2023 annual report and the performance forecast for the first quarter of 2024. Revenue for 2023 was 17.167 billion yuan, up 14.23% year on year, and net profit to mother was 1.588 billion yuan, up 38.61% year on year. Net profit from mother for the first quarter of 2024 was 400 million to 430 million yuan, an increase of 4.44%-12.27% year-on-year.
The TV foundry business is operating steadily, and shipments have increased significantly over the same period last year:
The global TV market was relatively stable in 2023, and overseas markets became the focus of market development. Outsourced processing orders from brand customers were concentrated in fewer ODM companies, and the company's TV foundry business operated steadily. According to statistics released by Lotu Technology, in 2023, the company shipped about 10.5 million TV units throughout the year, ranking third in global TV ODM factory shipments, with a sharp increase of 24.7% over the previous year. The increase was mainly due to incremental overseas orders. In overseas markets, the company mainly focuses on the North American market, and has successively developed markets such as Europe, Southeast Asia, South America, etc., and continues to develop high-value-added products such as miniLED, MicroLED COB commercial displays, and home theaters, expanding from smart TVs to multiple categories, laying the foundation for the company's TV business to make great strides.
Actively explore the LED industry chain business and continue to deepen industrial synergy advantages:
The company actively develops the entire LED industry chain business. The company's LED industry chain covers the three major application areas of lighting, backlighting, and direct display, and has deep multi-chain collaboration. Its subsidiary, Megachi Semiconductor, is the only chip factory in the industry that has produced full production and sales throughout the year and has made a large profit after deducting it. In 2023, demand in the LED market recovered steadily, and the company's downstream orders were sufficient. Under the premise of ensuring the company's full production and sales, in the second half of 2023, the company raised the price of LED chip products used in the general lighting market, and increased the proportion of high-value-added products such as Mini RGB chips, backlighting chips, and high-margin lighting based on capacity release. During 2023, Zhaochi Semiconductor successfully entered Samsung's supply chain system. In terms of COB displays, the company leads technological innovation. The annual report revealed that the company integrates supply chain collaboration to reduce costs and promote the penetration rate of COB technology in the LED small-pitch industry. The company has an absolute market share in the COB display market.
Investment advice:
We expect the company's revenue from 2024 to 2026 to be 21,562 billion yuan, 25.076 billion yuan, and 28.838 billion yuan respectively, and net profit to mother will be 2.01 billion yuan, 2.64 billion yuan, and 3,048 billion yuan respectively, giving 12 times PE in 2024. The target price for 6 months is 5.57 yuan, maintaining a “buy-A” investment rating.
Risk warning: downstream demand falls short of expectations; industry competition intensifies; new product development falls short of expectations.