Brief performance review
On April 25, the company disclosed its quarterly report. 24Q1 achieved operating income of 4.106 billion yuan, an increase of 11.14% over the previous year, and realized net profit of 415 million yuan, an increase of 8.25% over the previous year. Net profit after deducting non-return to mother was 408 million yuan, an increase of 21.95% over the previous year. In 2023, the company achieved operating income of 17.167 billion yuan, an increase of 14.23% over the previous year, and realized net profit of 1,588 billion yuan, an increase of 38.61% over the previous year. In Q4 alone, the company achieved operating income of 4.480 billion yuan, up 9.91% year on year, down 9.53% month on month, and realized net profit of 317 million yuan, up 19.40% year on year, down 41.11% month on month, gross profit margin 20.58%, up 0.61 pct year on year, up 1.87 pct year on month.
Management analysis
Chip-side product structure optimization, COB cost advantage is obvious, miniLED accelerates penetration. The company's LED industry chain is integrated. In the 24Q1 merger's net profit scale, LED contributed more than 50% in a single quarter for the first time. Looking at each link, (1) chip-side vertical integration+product structure optimization drive an increase in revenue scale and profitability.
The company has the advantage of advanced equipment. Currently, Mini RGB chips are shipped 10,000 KK groups per month, with a market share of more than 50%; product restructuring has expanded to high-end lighting and display fields in addition to ensuring the market position in the traditional lighting field, driving profit growth. (2) On the package side, new orders for mini LED TV backlight modules have been gradually shipped, and collaborative chips have helped the ODM business develop Mini LED TV share. (3) The rapid cost reduction of application-side COB led to miniLED penetration. 24Q1's COB directly showed revenue of 295 million, a significant increase over the previous year. As of April, the company's monthly COB output was 16,000 square meters (calculated at P1.25 point spacing), an increase of 400% + over the previous year; through the advantages of scale combined with the company's integrated yield improvement, the P1.25 equal-pitch single flat price had obvious market competitiveness, and the main point spacing price fell by half to 2/3 year-on-year.
Global TV ODM leader, expanding customers & increasing share to ensure steady business development. The company is deeply involved in audiovisual communication business, diversifies product categories, and explores overseas markets. According to Rotu Technology, 24Q1 shipped 2.12 million units, a year-on-year decrease of 15.5%, ranking third among professional foundries. Based on high-quality customer resources and strong manufacturing capabilities, the company's TV ODM business market share is expected to increase further.
Profit forecasting and valuation
The estimated net profit for 2024-2026 is 21.59 billion yuan, 26.61 billion yuan, and 3,052 billion yuan, +35.92%, +23.24%, and +14.71% year-on-year. The company's current price corresponds to PE valuation 12, 9, and 8 times, maintaining a “buy” rating.
Risk warning
ODM demand falls short of expectations, Mini LED penetration falls short of expectations, LED production capacity falls short of expectations, industry competition intensifies, majority shareholders reduce their holdings, and the risk of exchange rate fluctuations.