Incident: The company achieved operating income of 2,213 billion yuan for the full year of 2023, -12.9% year-on-year, and net profit of 103 million yuan, or -13.61% year-on-year. The company achieved full-year revenue of 445 million yuan in Q1 2024, -3.04% year-on-year, and net profit to mother of 45 million yuan, +226.21% year-on-year. The company plans to distribute a cash dividend of 0.7 yuan (tax included) for every 10 shares to all shareholders, with a dividend rate of 31.09%.
In 23 years, the company's C-side was under pressure, the cinema business developed with high quality, and the automotive optics business was ready to go. The To C business was affected by weak demand in the consumer electronics market, and revenue from the company's core components and machine business was -13%, of which laser optical engine revenue was -2.5%. The revenue from the cinema screening service business was +37.24% compared to the same period. The domestic film market showed a steady positive trend, promoting the high-quality development of the company's cinema core device business. The company's automotive optics business has entered a period of accelerated development. It has obtained 6 high-quality front-mount targets around the automotive business, and the first fixed-point model, the M9, was officially launched at 23M12.
The cinema business contributed a lot to profits, and the company increased investment in vehicle-related R&D. In 2023, the company's gross margin was 36.22%, +3.58pct year on year, net margin was 0.8%, and -0.42pct year on year. By product, the gross margin of the 23A core device and machine business was +4.7 pct. Among them, the gross margin of the laser optical engine/projector was +1.1/+0.9 pct year over year, and the cinema projection business contributed more gross margin. On the cost side, the company's 2023 sales, management, R&D, and finance expense ratios were +0.41, -0.52, +2.38, and -0.52 pct.
The increase in the company's R&D cost rate is mainly due to the increase in R&D investment in the automotive core device business.
24Q1 The company's cinema business continued to improve, and the automotive optical business began to expand. The Spring Festival box office reached a new high, driving the company's cinema business revenue to continue to improve, achieving a year-on-year revenue increase of +21%; automotive business revenue reached a breakthrough of 0 to 1, vehicle optics business revenue of 48.26,800 yuan, and 24M3 entered the intensive mass production and delivery stage. As the automotive optics business enters a revenue contribution period, we believe that the subsequent automotive optics business will have a positive impact on the company's future business performance.
The company optimized expenses, and the loss of peak rice continued to improve. On the profit side, the company's gross margin for Q1 in 2024 was 32.44%, -2.93pct year on year, and the net margin was 9.29%, +9.57pct year on year. On the cost side, the company's Q1 sales, management, R&D, and finance expenses rates for 2024 were 9.9%, 8.82%, 12.14%, and -0.74%, respectively, -3.15, -0.41, -1.68, and -1.41pct. 24Q1 optimized and controlled expenses. The year-on-year cost ratio was -20.60%, and the results of cost reduction and efficiency were remarkable; in terms of R&D expenses, the company maintained continuous investment in automotive business R&D. Among them, Fengmi Technology achieved reasonable control and optimization of expenses during the period, and the overall operating quality continued to improve. Losses decreased by 15 million yuan year over year, and the loss margin was -40.12% year over year, reducing the impact on the company's profit indicators. Currently, arbitration matters between the company and GDC parties are still under investigation. The legal service costs incurred in the 24Q1 arbitration case were 7.5593 million yuan. If this part of the influence is excluded, the costs can be further reduced during this period. In addition, investment income and gains and losses from changes in fair value generated by some transactional financial assets also contribute to the profit side.
The automotive business is expected to grow rapidly in '24. On April 12, the company's first designated model, the M9, has surpassed 70,000 units, laying a solid foundation for the high growth of the automotive business throughout the year. At the same time, the company unveiled the world's first all-in-one all-in-one laser headlight at the 2024 Beijing Auto Show, which integrates various functions such as high beam ADB headlights, color changing temperature headlights, fog lights, ground information display, car cinema, etc., to meet diverse needs such as lighting, display, safety and entertainment needs, and further enrich the company's in-vehicle product matrix. In addition, at the auto show, the company also announced a collaboration with the Smart brand's next-generation pure electric model Genie #5 concept car. The car's laser projector is provided by Guangfeng, has automotive-grade quality, 100% P3 color gamut display, and supports signal transmission through in-car devices and mobile phones to start the movie viewing mode with one click. We expect this mass-produced model to be released and launched in the second half of this year, which is expected to contribute revenue to the company's automotive business.
Investment advice: The company is a leading enterprise in the field of laser display, ALPD? The technology is unique and the barriers are deep. Since 23 years, the company's B-side business has continued to recover, while the automotive business has continued to expand, and the revenue side has achieved a breakthrough of 0 to 1, which is expected to create a new growth curve in the future. According to the company's annual report and quarterly report, we raised the revenue growth rate of the automotive optics business and increased the investment in R&D expenses. The company's net profit for 24-26 is estimated to be 1.76/2.45/308 million yuan (the previous value was 120/140 million yuan 25-26 years ago), respectively, and 51.3x/37x/29.4x for PE, respectively, maintaining a “buy” rating.
Risk warning: The amount of laser micro launches falls short of the expected risk, the recovery of the cinema business falls short of the expected risk, the development of customers in the automotive sector falls short of the expected risk, and the risk of iteration of the new technology path.