Incidents:
On April 18, 2024, the company released its 2023 annual report. During the reporting period, the company achieved operating income of 33.651 billion yuan, a year-on-year increase of 6.56%, and realized net profit to mother of 1,965 billion yuan, a year-on-year decrease of 17.5%.
Opinions:
The optoelectronic display sector dragged down profits, and profitability improved quarterly. In 2023, there was an imbalance between supply and demand in the optoelectronic display market, demand in the communication equipment industry declined, and some overseas customers adjusted their supply chain strategies. The company adhered to the “two-wheel drive” development strategy, focused on consumer electronics and new energy, and achieved revenue of 33.651 billion yuan, an increase of 6.56% over the previous year. Due to the capacity utilization rate and sales price of some optoelectronic display devices and modules falling short of expectations, a net profit of 1,965 billion yuan was realized, a year-on-year decrease of 17.05%. Among them, the first to fourth quarters achieved revenue of 65.12/71.55/ 88.34/11.151 billion yuan, respectively, and net profit to mother of 4.72/3.53/5.08/632 billion yuan, respectively. Since the second quarter, the profit situation has improved quarterly, and industry sentiment may gradually increase. During the reporting period, the company achieved a net operating cash flow inflow of 5.172 billion yuan, an increase of 11.72% over the previous year.
Two-wheel drive, focusing on key customers, benefiting from the recovery in industry prosperity. There was an imbalance between supply and demand for optoelectronic displays during the reporting period. The volume and price of the company's LED devices fell sharply, and rising costs dragged down gross profit margins. In terms of new energy, the company completed acquisitions of Suzhou Jingduan and Aranda plants in the US during the reporting period to enhance product supply capacity and accelerate the introduction of products for major customers. During the reporting period, the company's new energy business revenue was 6.361 billion yuan, a significant increase of 168.39% over the previous year. In 2024, the consumer electronics boom may gradually pick up, and the penetration rate of new energy vehicles will further increase. The company is focusing on two major business directions, and performance is expected to improve.
Profit forecast and investment rating: Combined with the pace of recovery in downstream demand and changes in the company's product structure, we expect the company to achieve operating income of 37.707 billion yuan, 42.350 billion yuan, and 46.561 billion yuan respectively in 2024-2026, and achieve net profit of 2,375 billion yuan, 2,823 billion yuan, and 3.162 billion yuan, corresponding to PE of 10.3, 8.6, and 7.7 times, respectively. First coverage, giving a “buy” rating.
Risk warning: Downstream demand recovery falls short of expectations; product expansion in the field of new energy falls short of expectations; macroeconomic fluctuations; geopolitical risks; quoted third-party data may be omitted or not updated in a timely manner.