Incidents:
Olaide released its 2023 annual report on April 18: In 2023, the company achieved revenue of 517 million yuan, an increase of 12.73% year on year; realized net profit of 122 million yuan, up 8.16% year on year; realized net profit deducted from mother 76 million yuan, a year-on-year decrease of 5.31%.
Investment highlights:
Materials continue to grow at a high rate, and equipment diversification accelerates. In 2023, the company's evaporation source equipment achieved revenue of 199 million yuan, a year-on-year decrease of 19.01%; organic light-emitting materials achieved revenue of 318 million yuan, an increase of 49.42% over the previous year. In terms of organic light-emitting materials, the company's G', R', and B' materials have been introduced into the production line and are now stably supplied; in terms of packaging materials, the company's products have achieved stable supply; in terms of PSPI materials, the company's products have passed mass production tests by some customers and delivered in batches. In terms of equipment, the company initially realized the transformation from a single evaporation source business to production line transformation and perovskite preparation. In 2023, the subsidiary Shanghai Shengyi completed the signing of contracts for additional evaporation source projects in Xiamen Tianma Phase II and Chongqing BOE Phase III. The high-generation linear evaporation source has now completed sample preparation and is undergoing performance and parameter tests. The perovskite evaporation machine has completed the overall design. Prototypes are being produced. The silicon-based OLED evaporator is in the marketing stage.
The gross margin of materials increased significantly, and investment in R&D continued to increase. In 2023, the company's gross margin was 56.46%, up 1.86pct year on year, and the net profit margin to mother was 23.64%, down 0.99pct year on year. In 2023, the gross margin of organic light-emitting materials was 50.37%, up 13.35 pct year on year, and the gross margin of evaporation sources was 66.20%, down 3.56 pct year on year. The company's expense ratio for the 2023 period was 39.25%, up 5.58pct year on year, of which sales expenses were 0.16 million yuan, up 23.70% year on year; management expenses were 95 million yuan, up 31.02% year on year; R&D expenses were 102 million yuan, up 13.49% year on year; and financial expenses were -10 billion yuan.
Profit forecasts and investment ratings take into account the uncertainty of domestic substitution of new materials. We lowered our 2024 and 2025 profit forecasts. We expect the company to achieve revenue of 7.36, 11.21, and 1,603 billion yuan in 2024/2025/2026, and net profit of 1.89, 2.69, and 394 million yuan. The current price corresponds to PE 23, 17, and 11 times, respectively. The company has accelerated the release of new materials in recent years, and the evaporation machine is worth looking forward to in the medium to long term.
Risks suggest that customer verification of new materials falls short of expectations; evaporation machine development and market expansion falls short of expectations; construction of high-generation OLED production lines falls short of expectations; industrialization of perovskite falls short of expectations; industry competition risks; and secondary market liquidity risks.