Lay out three major fields to transform growth momentum. The company lays out the three major fields of consumer electronics, automotive electronics and metaverse. It has five major business segments: semiconductor imaging components, thin-film optical panels, automotive electronics, reflective materials, and semiconductor optics, and continues to expand its product matrix. In 2023, we achieved revenue of 5.08 billion yuan, an increase of 16% over the previous year. Optical imaging components grew steadily, thin-film optical panels grew into a new business pillar, and new businesses such as automotive electronics developed rapidly. The company attaches importance to independent research and development capabilities for core technologies, and gradually realizes the transformation from cost driven to technology driven.
Consumer electronics: The trend of coating filter upgrades is evident, and microprisms are rapidly released. Benefiting from the recovery of the consumer electronics market and AI terminal innovation trends, related optical components are expected to usher in market growth. The company develops and mass-produces coated filters based on traditional infrared cutoff filters, which have leading technical advantages and increased value; mass production of new microprism products began in June 2023, helping the company grow kinetic energy conversion and successfully transform from OEM to ODM. Thin film optical panel products are highly competitive in terms of quality, yield, etc., and their market share is constantly increasing.
Automotive electronics: AR-HUD leader, drawing a second growth curve. The growth in automobile sales and the development of automobile intelligence have led to an increase in the scale of the automotive electronics industry. The company mass-produces products such as HUD and lidar windows. In '23, the company added more than 10 AR-HUD targets, three “firsts” in mass production, market share, and overseas cooperation, and further increased market share through internal potential development to achieve the ideal strategic position. The company is leading in lidar window film technology, and has entered the supply chain of many leading lidar customers and achieved mass production delivery.
AR+: The eyeglass imaging module is fully laid out, and metaverse optics is expected to be a strategic card. With advances in AI, cloud computing, and near-eye display hardware, the AR glasses market will expand further. According to Wellsenn XR forecasts, global sales of AR glasses will be around 510,000 units in 2023, up 21% year over year, and are expected to reach 5 million units by 2027.
The imaging module is the key to the further promotion of AR glasses. In the long run, the performance advantages of array optical waveguide are obvious. The company has a layout in Birdbath and the three types of mainstream optical waveguides, has a deep accumulation of mobile phone optics, and has cooperative relationships with leading international manufacturers such as Lumus and SCHOTT, and has a pioneering advantage in array optical waveguides. Metaverse optics is expected to become an important growth point for the company in the future.
We predict that the company's net profit for 2024-2026 will be 8.2 billion yuan, 10.4 billion yuan, and 1.27 billion yuan respectively (the original net profit for 24-25 was 8.1/1.01 billion yuan respectively, mainly adjusted gross profit margin). According to comparable companies' 24-year 30 PE valuation, corresponding to a target price of 17.7 yuan, the corresponding target price was 17.7 yuan, maintaining the purchase rating.
Risk warning
The recovery of the consumer electronics market fell short of expectations, market competition intensified, progress of new products fell short of expectations, development of the AR industry fell short of expectations, and changes in assumptions affected the calculation results.