Incident: The company released its 2023 annual report. In 2023, the company achieved revenue of 17.17 billion yuan, up 14.2% year on year; realized net profit of 1.59 billion yuan, up 38.6% year on year; realized deducted non-net profit of 1.53 billion yuan, an increase of 60.1% year on year. Non-recurring profit and loss was mainly a decrease of 120 million yuan in government subsidies compared to the same period last year.
Looking at a single quarter, Q4 achieved revenue of 4.48 billion yuan, an increase of 9.9% over the previous year; realized net profit of 320 million yuan, an increase of 19.4% over the previous year; and realized net profit of 410 million yuan after deduction, an increase of 115.5% over the previous year.
In 2023, the company's cash dividend was 480 million yuan, and the cash dividend ratio reached 30.2%.
Driven by the North American TV market, the company's ODM shipments soared. During the reporting period, the company's multimedia audiovisual products and operation services achieved a 12.6% year-on-year increase in revenue of 12.66 billion yuan. According to Lotu Technology data, the company's annual TV ODM shipments in 2023 were about 10.5 million units, ranking third among professional foundries, with a sharp increase of 24.7% over the previous year. Mainly due to the recovery of the North American market, which is the core region of the company, it has led to a significant increase in OEM orders and shipments from regional customers. At a regional level, the company's domestic and foreign sales achieved revenue of 7.74 billion yuan/9.43 billion yuan, respectively, -7.8%/42% year-on-year. Mainly due to the increase in the company's ODM mainly contributing to export sales.
The LED industry chain layout is perfect, and production capacity climbs to release profits. In 2023, the company's LED industry chain achieved revenue of 4.5 billion yuan, +19.1% year-on-year, accounting for 26.2% of the company's total revenue. The LED industry chain achieved a gross profit margin of 25.8%, an increase of about 5pp over the previous year. This is mainly due to the improved layout of the LED industry chain, completed a decline in production capacity, and improved yield and efficiency. The company's gallium nitride chip production capacity ranks second in the industry, and production and sales volume rank first in the industry. The expansion of LED chip production provides the driving force for the company to increase its market share with high added value such as mini RGB, mini BLU, and high-end lighting.
Popular online applets and skits brought in new volume. In 2023, Fengxing Online achieved revenue of 670 million yuan and net profit of 90 million yuan. Fengxing Online is positioned as a digital entertainment creation and distribution platform. Currently, it has three business segments: audiovisual platform and terminal business, applet content distribution, and skit production and distribution. During 2023, the applet content distribution business grew rapidly and became the main performance contributor to Fengxing Online. It is expected that the next few years will continue to grow, becoming a new increase in the company's performance.
Profit forecasting and investment advice. The company's ODM maintains its position as a leading company in the industry. Major customers cooperate closely, continuously improve the LED industry chain layout, keep up with industry trends, and actively develop higher value-added products. The company's 2024-2026 EPS is expected to be 0.49 yuan, 0.58 yuan, and 0.69 yuan respectively, maintaining a “buy” rating.
Risk warning: Risks such as overseas demand falling short of expectations, increased competition, and price reductions in the LED industry chain.