Leading provider of laser display hardware and solutions, pioneering ALPD technology and rich downstream application scenarios.

The company is the world's leading supplier of laser core devices, pioneering ALPD? Underlying source technology, from the “speckle scattering” problem at the source, uses the advantages of the domestic rare earth materials supply chain to expand the application of rare earth materials to the field of laser display, successfully breaking through industrialization bottlenecks such as high cost, low light efficiency, and strong speckle scattering of RGB three-color laser displays. Currently, sixth-generation technology continues to be developed, which can better meet the technical requirements of emerging fields such as downstream automotive optics, AR, and robotics. The company has developed in-depth cooperation with leading companies such as China Film Co., Ltd., BARCO, AIRBUS, SONY, Xiaomi, Dangbei, BYD, and Cyrus.

The automotive industry has broad prospects, and the 2024 business will enter a harvest period. Vehicle optics is an important part of the differentiated configuration of car companies, including HUD, display, vehicle projection, etc. HUD solves the pain points of looking down at the instrument & navigation. As the price of the vehicle falls, the penetration rate of front equipment is rapidly increasing. Vehicle projection technology routes are the same, and application scenarios are constantly expanding. In terms of smart car lights, there is a trend of integration of display+lighting, including road surface projection, pixelated signal lights, etc. The company's original ALPD is the only laser display and lighting core technology certified by vehicle regulations. It can simultaneously meet the dual needs of future smart headlight lighting+display, with high brightness, strong reliability and low cost. Since 2022, the company has been working hard to lay out the automotive business and has obtained 6 high-quality fixed points. The 2024Q1 automotive business has entered a harvest period, and the M9 project contributed 50 million yuan in quarterly revenue. M9 sales momentum is strong, driving the company's automotive revenue to be released rapidly.

The traditional main business has a solid foundation and leading market share. (1) Film market recovery+laser replacement, cinema business trend is improving. The company's rental and sales are synchronized, and leases are charged on time/on schedule. Its ALPD laser light source projection solution has installed about 30,000 sets in China. Starting in 2023, the movie market will pick up, box office and movie viewers will increase dramatically, and the cinema business is expected to pick up. (2) Complete engineering and commercial education products, rich application experience. The company can meet the diverse, differentiated and graded needs of various teaching and commercial uses and end users, and has the highest market share. (3) The household market is making independent efforts, and brand projection is fully lasered. Projection consumption pursues high quality and high cost performance, driving brand projection laserization. According to Rotu Technology, global home laser projection shipments are expected to be 1.25 million units in 2024, an increase of 35% over the previous year.

The shipment volume of the company's products (including smart micro investment) ranks among the highest in the industry.

Profit forecast and valuation: It is estimated that in 2024-2026, the company's revenue will be 2.93 billion yuan/3.41 billion yuan/3.87 billion yuan, up 32%/16%/14% year on year, and net profit to mother will be 210 million yuan/290 million yuan/410 million yuan respectively, up 107%/37%/39% year on year, and PE 39/29/21 times, respectively. We selected Juguang Technology and Keboda, which are similar to the company's laser and automotive businesses, as comparable companies (average PE was 48 times higher in 2024). Considering that the company's automotive business has begun to contribute revenue, it is expected to begin rapid growth, cover for the first time, and give it an “increase in weight” rating.

Risk warning: The automotive business falls short of expectations. The recovery of the film market and the introduction of products fell short of expectations. Industry demand fell short of expectations.