Incident: The company released its 2024 quarterly report, achieving operating income of 12.70 billion yuan, +10.6% year on year; realized net profit of 4.7 billion yuan, -24.8% year on year; realized net profit without return to mother of 380 million yuan, -21.9% year on year.
Steady revenue growth, leading the high-quality development of the industry. The company achieved revenue of 12.70 billion yuan in 24Q1, +10.6% year-on-year. On the industry side, the domestic black TV market volume decreased and increased in 24Q1 - according to data from Aowei Cloud Network, the sales volume of China's color TV market in 24Q1 was 7.06 million units, down 5.3% year on year. Under the influence of high fluctuations in upstream panel prices and the continuation of the structural upgrading trend of the color TV industry, the unit price of Q1 color TV continued to rise, and the market sales scale was 255 billion yuan, up 12.6% year on year. There was no shortage of structural highlights in the black power industry in the first quarter: the sales share of 75-inch and above products increased across the board, and domestic Mini LED sales were 244,000 units, an increase of about 95% over the previous year.
In this context, the company adheres to the “100 inch pilot” market strategy, continuously optimizes the product structure, and resolutely promotes the upgrading of the industry to high-end and large screens.
Panel prices drag down gross profit margins, and costs are effectively controlled. The 24Q1 company's overall gross profit margin was 15.8%, -2.4 pcts year over year, mainly affected by changes in panel costs. On the cost side, the company's 24Q1 sales/management/R&D/finance expenses were 6.1%/1.7%/4.1%/0.2%, respectively, -0.6/-0.4/+0.1pct compared to -0.6/-0.4/+0.1pct. The total cost side was optimized 1.0 pct. Under the combined influence, 24Q1 achieved a net interest rate of 3.7% to mother, -1.7 pcts year over year.
Investment advice: The company is one of the leading enterprises in the global display industry. In the context of continuous optimization of the competitive landscape of the industry, global development capabilities continue to improve, and diversified brand matrix operation capabilities and operating efficiency continue to improve. It is expected to drive product structure upgrades and steady restoration of profitability in the future. At the same time, the company continues to cultivate and break through the “1+ (4+N)” industrial layout of efficient collaboration and independent development, accelerate R&D and product promotion in new technologies such as miniLED, microLED, virtual reality display and AIGC, and continue to consolidate its leading position in the display industry. We are optimistic about the company's steady and positive development in the medium to long term. We expect net profit to be 24.1/28.0/3.23 billion yuan in 24-26, corresponding to the 24-26 PE of 14.5x/12.5x/10.8x respectively, maintaining a “buy” rating.
Risk warning: The rapid rise in panel prices increases the company's cost pressure, or the fall too fast causes price competition in the industry to intensify, affecting the company's profit margin; the development of the new display business falls short of expectations.