The company released its annual report for the year 23 and the quarterly report for 24Q1: the company achieved revenue of 53.616 billion yuan in 23, +17.22% year over year; realized net profit to mother of 2,096 billion yuan, +24.82% year over year. The company achieved revenue of 12.702 billion yuan in 24Q1, +10.61% year-on-year, realized net profit of 467 million yuan, -24.81% year-on-year, and realized net profit without deduction of 378 million yuan, or -21.92% year-on-year. The company plans to distribute dividends of 8 yuan for every 10 shares, with a dividend rate of 50.16%, corresponding to the May 30 stock price, with a dividend rate of 2.98%.

The company's smart terminal display business maintained steady growth in '23, and the new display business opened a second growth curve. 23 The company's sales volume of smart display terminal products reached 26.54 million units throughout the year, achieving revenue of 41,257 billion yuan, +17.01% year-on-year, and a gross profit margin of -1.36 pct to 15.99% year-on-year. The company accurately positioned itself around the three major brands Hisense, Toshiba, and Vidda, combined with ULED X technology to continuously optimize the product structure to fully open up market demand, and its domestic and foreign market share increased significantly. The profitability of the new 4+N display, which combines lasers, commercial displays, cloud services and chips as the core and new virtual and in-vehicle lamp displays, continues to grow, achieving revenue of 6.517 billion yuan, +40.6% year over year, and a gross profit margin of -6.54 pct to 31.68%. The company is leading the global laser display industry. According to Omidia data, Hisense's laser TV shipments in '23 ranked first in the world with 49.49%. The company's commercial display business has covered more than 40 countries and regions in the four major regions of Europe, the United States, Asia Pacific, and the Middle East and Africa23. The annual commercial display business revenue was +40.6% year-on-year. The company has completed the development of AR split glasses, and MR products have been showcased at CES and AWE exhibitions. The company actively invests in basic AI technologies such as chips and large models, and continues to enrich the company's product matrix. The company held Qianzhao Optoelectronics in '23. The company has become a display enterprise spanning upstream chips and midstream module design to downstream terminal applications and cloud services, achieving a high degree of vertical integration.

In terms of profitability, the company's 23 annual gross margin was -1.29pp to 16.94% year over year, -0.05pp; sales/R&D/management/financial expense ratios changed respectively -0.93pp/ -0.11pp/+0.19pp/+0.08pp to 6.73%/4.44%/1.74%/-0.02%; 23. The net profit margin for the whole year was +0.24pp to 3.91% year over year.

The company's 24Q1 gross margin was -2.41pp to 15.76% year-on-year, and -1.04pp; sales/R&D/management/financial expense ratios changed by -0.59pp/-0.37pp/-0.22pp/+0.14pp to 6.05%/4.13%/1.66%/0.19%; 24Q1 net profit margin was 3.67%, year-on-year.

Investment advice. In the short term, major sporting events such as the Olympics and the European Cup are expected to boost demand for terminal TVs, and demand-side recovery is expected to give a positive signal on the supply side. We expect panel costs may show signs of gradual improvement after 24H1; in the long run, the company's 1+ (4+N) display industry layout and mixed transformation. The terminal market products integrate structural optimization with emerging display technologies such as ULEDX and Mini LED. The company is expected to continue to explore market share and profit space in the future. We expect the company to achieve net profit of 2.35 billion yuan in 2024. The current stock price corresponds to the company's PE valuation 15 times, and the target valuation is 15-18 times, corresponding to a reasonable value range of 27.0 yuan to 32.40 yuan, maintaining the “superior to the market” rating. Risk warning. Upstream panel prices fluctuate; competition is tightening.