Event: On April 18 and April 25, 2024, the company released the 2023 Annual Report and the 2024 First Quarter Report, respectively. In 2023, the company achieved operating income of 3,054 billion yuan, a year-on-year increase of 40.5%; achieved net profit of 610 million yuan, an increase of 97% over the previous year, and achieved a gross profit margin of 52.4%, an increase of 5.8% over the previous year. In the first quarter of 2024, the company achieved operating income of 681 million yuan, an increase of 22.66% over the previous year, and realized net profit of 123 million yuan, an increase of 44.54% over the previous year.

Comment: Deeply involved in LED display control and video processing, domestic and overseas markets are growing rapidly. In 2023, by product, LED display control systems achieved revenue of 1,442 million yuan, an increase of 30.19%; video processing systems achieved revenue of 1,225 million yuan, an increase of 58.76%; cloud-based information publishing and management systems achieved revenue of 159 million yuan, an increase of 16.65 million yuan; accessories and other businesses achieved revenue of 147 million yuan, an increase of 38.22%; and other businesses achieved revenue of 32.4 million yuan, an increase of 50.41% year on year. By region, the domestic business achieved revenue of 2,580 billion yuan, an increase of 41.54% over the previous year; the overseas business achieved revenue of 474 million yuan, an increase of 35.05% over the previous year.

Increase investment in R&D and maintain the company's advantages. In 2023, the company invested 442 million yuan in R&D, an increase of 38.47% over the previous year. The company currently has core technologies such as high-precision full-grayscale brightness correction technology, small-pitch LED display image quality engine technology, high-synchronization video processing technology that supports multi-layer and multi-screen management, intelligent image color processing technology and super-resolution reconstruction technology based on human visual characteristics, and high-accuracy intelligent fault recognition technology for display clusters. Various projects such as COEX series control systems and display cloud service solutions are also being developed and verified, and the company's core strengths are expected to continue to be maintained.

The business is expected to continue to expand, and the future development of the company can be expected. The capital raised by the company will be used to invest in projects such as the Nova Optoelectronic Display System Industrialization R&D Center Project, the UHD Display Control and Video Processing Technology Center Project, and the Marketing Network and Service System Upgrade. After completion, the project will further enhance the company's core competitiveness, play a supporting role in the company's business innovation, creativity and creativity, and further enhance the company's future performance returns.

The dividends are strong, and shareholders are actively rewarded. The company announcement plans to distribute cash dividends of RMB 97 (tax included) to all shareholders for every 10 shares based on the total share capital of the existing company, with a total cash dividend of RMB 498.192 million (tax included); to transfer 8 shares for every 10 shares to all shareholders using the capital reserve fund, for a total increase of 41.088 million shares.

Investment advice: We predict that the company will achieve net profit of 933/13.27/1,725 million yuan in 2024-2026, maintaining a “buy” rating

Risk warning: risk of rising raw material prices; increased risk of market competition; risk of intellectual property protection; risk of downstream LED showing less prosperity than expected.