Higashiyama Seimitsu published its annual report for the year 23 and the quarterly report for the year 24. The company achieved operating income of 33.651 billion yuan in '23, an increase of 6.56%; net profit to mother of 1,965 billion yuan, a year-on-year decrease of 17.05%; net profit after deducting net income of 1,615 billion yuan, a year-on-year decrease of 24.08%. In 24Q1, the company achieved operating income of 7.745 billion yuan, up 18.94% year on year; net profit to mother was 289 million yuan, down 38.65% year on year; net profit after deduction was 261 million yuan, down 6.71% year on year.
The LED and touch business is under pressure, and consumer electronics and automotive electronics are performing steadily. In 2023, the company's electronic circuit/touch panel and liquid crystal display module/precision component/LED display device business achieved revenue of 232.61/48.62/41.62/1,190 billion yuan respectively, with year-on-year growth of 6.61%/42.88%/-8.45%/-29.24%, respectively. The company's new energy business is developing rapidly, achieving revenue of 6.361 billion yuan in 23, an increase of 168.39% over the previous year; 24Q1 achieved revenue of 1,829 billion yuan, an increase of 56.46% over the previous year. In 2023, production capacity utilization rates and sales prices of some optoelectronic display devices and modules, such as LEDs, fell short of expectations, resulting in phased losses, putting some pressure on the company's performance. Beginning in the second half of '23, the downstream cycle of the LED and touch display industry bottomed out, while the company continued to narrow its losses sequentially by strengthening internal management.
Two-wheel drive is developing steadily, and the buyback shows the company's confidence. In the consumer electronics business, the company continues to obtain new soft board material numbers from major consumer electronics customers, break through module board products, and continuously increase the value of stand-alone machines. In the NEV business, the company relied on the accumulation of experience in precision metal processing technology and the global R&D and sales layout to achieve rapid breakthroughs, becoming the main growth point in the future. According to the company's repurchase announcement, as of January 15, 2024, the company had implemented a total repurchase of 1,58,800 shares, with a total transaction amount of 24.997 million yuan, demonstrating the company's confidence in future development.
Profit forecasting and investment advice. The company's EPS is expected to be 1.30/1.56/1.84 yuan/share in 24-26, respectively. The company's leading position in the industry, improving management quality and efficiency. Referring to comparable company valuations, we maintain the firm's reasonable value of 26.27 yuan/share unchanged, corresponding 20 times the 24-year PE valuation, maintaining the “buy” rating.
Risk warning. Customer concentration risk, international trade risk, exchange rate fluctuation risk.