Incident: The company released its 2024 quarterly report. The company achieved revenue of 4.11 billion yuan, +11.1% year over year; realized net profit of 410 million yuan, +8.3% year over year.
ODM declined due to the high base. According to Lotu data, the company shipped 2.12 million Q1 TV ODM units, down 15.5% year on year, ranking third among professional foundries, mainly due to the high base figure brought about by the sharp increase in overseas orders in 23Q1, while orders in the North American region declined in 2024. We believe that the company's leading OEM position is still stable, and the main customer, ONN and other brands, are developing well locally. We expect to return to a normal shipping pace in 2024. Q1 is the traditional low season, and subsequent quarterly improvements will follow.
The LED industry chain continues to improve, contributing to major profits. Through the strategic development of the Mini LED vertical industry chain in 2023, the company achieved significant performance improvements in all aspects of the LED industry chain. During the reporting period, the LED industry chain contributed more than 50% of the consolidated net profit margin in a single quarter for the first time. (1) In terms of Mini RGB chips: Currently, the company's monthly shipment volume of Mini RGB chips is 10,000 KK groups, with a market share of more than 50%. (2) In terms of COB direct display terminals: During the reporting period, the company's COB directly reported revenue of 295 million yuan in a single quarter, a significant increase over the previous year. As of April 2024, the company's monthly COB output was 16,000 square meters (measured at P1.25 point spacing), an increase of more than 400% over the previous year. (3) In terms of mini LED backlight modules: The company has successfully developed major customers at home and abroad. New orders for mini LED TV backlight modules have been gradually shipped, and collaboration with the chip business has helped TV ODM develop the share of mini LED TVs.
Profit forecasting and investment advice. The company's ODM maintains its position as a leading company in the industry. Major customers cooperate closely, continuously improve the LED industry chain layout, keep up with industry trends, and actively develop higher value-added products. The company's 2024-2026 EPS is expected to be 0.49 yuan, 0.58 yuan, and 0.69 yuan respectively, maintaining a “buy” rating.
Risk warning: Overseas demand falls short of expectations, increased competition, LED industry chain price reduction, etc.