Incidents:
Qianzhao Optoelectronics released quarterly reports for 2023 and 2024. In 2023, it achieved revenue of 2,387 million yuan/ +40.63%, net profit attributable to mother of 32 million yuan, and net profit not to mother of -28 million yuan/ +80.58%.
2023Q4 had revenue of 550 million yuan/ +14.69% in a single quarter, net profit of 119 million yuan/ +515.28%, net profit of 119 million yuan/ +346.41% after deducting non-return net profit. 2024Q1 had revenue of 556 million yuan/ +21.18% in a single quarter, net profit loss of 06 million yuan, loss of 102 million yuan for the same period of the previous year; after deducting non-net profit loss of 111 million yuan, loss of 121 million yuan for the same period last year.
Comment:
Optimize business strategies to turn losses into profits. The company achieved revenue of 2,387 billion yuan in 2023, an increase of 40.63% over the previous year. The epitaxial film and chip business achieved good growth. Revenue increased by 20.27%/161.25%, respectively. The company's overall gross margin was 12.38%, of which the gross margin of the epitaxial film and chip business was 14.36%. In terms of expenses, the company's sales, management and R&D expenses in 2023 changed 1.40%/-18.03%/6.42% year-on-year. 2024Q1's main revenue was 556 million yuan, up 21.18% year on year; net profit attributable to mother - 5.646 million yuan; company deducted non-net profit - 10.789 million yuan.
The company actively promotes management reforms and fully implements lean management around the theme of “cost reduction and efficiency”.
In 2023, the company continued to improve the level of equipment intelligence and automation. The annual capacity utilization rate reached 85%, up 10.4% year on year, and the per capita efficiency increased 25.17% year on year; through deep cooperation with strategic customers and continuously improving the accuracy of sales forecasts, the annual production and sales rate reached 107%, and inventory turnover accelerated by 40 days year on year; at the same time, by digging deeper into the space for cost reduction and efficiency, single-chip sales costs fell 6.3% year on year, and the cost rate decreased 7.01 percentage points over the same period.
Continue to increase investment in R&D, upgrade traditional industries, and break through new businesses. In 2023, the company invested 139 million yuan in R&D. The company has 426 R&D personnel, accounting for 19.13% of the total number of people in the company. The company continues to iteratively upgrade its products, improving overall performance by more than 10%, LED+ solar battery two-wheel drive, and the proportion of high-end products is constantly increasing.
In 2023, the company's RGB directly showed that its market share was further increased. At the beginning of 2023, Hisense Vision officially became the company's controlling shareholder, bringing great support and all-round empowerment to the company. At the same time, in order to attract and retain core management, technical and business talents, and fully mobilizing their enthusiasm and creativity, the company announced the 2024 Restricted Stock Incentive Plan. For the first time, a total of 186 people were awarded incentives, amounting to 32 million shares.
Investment advice: The company is a leading supplier of LED chips and gallium arsenide solar cell epitaxial wafers in China. As inventory clears up and market demand picks up, we expect the company's revenue for 2024-2026 to be $34.44/42.36/5.084 billion yuan, respectively, and net profit to mother of RMB 2.13/2.83/312 million yuan, corresponding to EPS of 0.23/0.31/0.34 yuan, corresponding to PE26/19/17X, maintaining an “increase in holdings” rating.
Risk warning: LED market demand recovery falls short of expectations, profits and forecasts fall short of expectations, etc.