Incident: The company released its 2023 annual report and 2024 quarterly report. The company achieved revenue of 5,076 billion yuan in 2023, an increase of 16.01% over the previous year; achieved net profit of 600 million yuan, an increase of 4.15% over the previous year; and realized deducted non-net profit of 523 million yuan, an increase of 2.72% over the previous year. In Q1 2024, we achieved revenue of 1,345 billion yuan, up 53.41% year on year, down 11.89% month on month; realized net profit of 179 million yuan, up 92.49% year on year, up 9.96% month on month; realized deducted non-net profit of 170 million yuan, up 170.77% year on year, up 7.88% month on month.
Steady year-on-year growth in 23, and rapid year-on-year growth in Q1: The company's performance grew steadily throughout 2023, mainly in Q3 and Q4 in 2023, and mass production of the company's new products successfully entered the peak period; 2. The company successfully mass-produced miniature prism module products for major customers; 3. Thin film optical panels continue to increase in customer share and increase product yield. The company's performance in Q1 in 2024 achieved rapid year-on-year growth, mainly due to: 1. The optical components business, thin-film optical panel business, and reflective materials business achieved significant year-on-year growth of about 85%, 45%, and 50%; 2. Internal cost mining potential and period cost rates have dropped dramatically. In Q1 2024, the company's gross margin was 24.00%, down 0.36 pcts year on year, down 5.70 pcts month on month; the company's net margin was 13.79%, up 2.90 pcts year on year, up 2.89 pcts month on month.
In terms of expenses, the company's sales, management, R&D and financial expenses rates in Q1 2024 were 1.21%/5.45%/6.26%/-1.74%, respectively, with year-on-year changes of -0.24/-1.95/-3.61/-0.96pct, respectively.
The company's expenses rate declined year-on-year during the period, and the company achieved remarkable results in reducing costs and increasing efficiency.
Smartphone market recovery, rapid release of new products: In 2023, with the gradual recovery of the global economy, the decline in the smartphone market narrowed and returned to a positive growth trajectory at the end of the year. According to IDC data, global smartphone shipments in 2023 were 1.17 billion units, a decline narrower than in 2022 to 3%. Furthermore, according to IDC estimates, global smartphone shipments will reach 1.2 billion units in 2024, an increase of 2.8% over the previous year. The smartphone market has broken out of its trough and is beginning to show an upward trend. In the field of optical components, the company successfully achieved mass production of miniature optical prisms in June 2023, and the company became the world's first mass production supplier of quadruple reflection prism modules. The company's new miniature prism module product was the first in the industry to achieve mass production implementation, demonstrating consumer-grade mass production capabilities. The company will continue to iterate around the miniature optical prism module project, and the business is expected to achieve steady growth. In the field of reflective materials, in 2023, the company's domestic and foreign license plate film business has achieved batch supply, contributing 10 million sales. In the field of semiconductor optics, in 2023, the company's chip coating products overcame technical problems such as lithography and coating, achieved major technological breakthroughs from glass coating to chip coating, and successfully completed market development, contributing to considerable sales.
The automotive optoelectronics market is vast, and automobiles+AR has formed a new growth curve: According to statistics from the China Association of Automobile Manufacturers, in 2023, China completed a total of 30.1.61 million vehicles and 30.94 million vehicles, up 11.6% and 12%, respectively, over the previous year, and production and sales reached record highs. In 2023, China completed production and sales of 9.587 million units and 9.495 million units respectively, with year-on-year increases of 35.8% and 37.9%, respectively. The market share reached 31.6%, and the penetration rate reached 30.4%. With the development of electrification, intelligence, and connectivity of automobiles, the functional positioning of automobiles is gradually shifting from a simple travel tool to an intelligent mobile living space. Automobile consumption has entered an era of stock, and the new energy market has become the driving force for industry growth. The company seizes the window of new energy vehicles and opens up a new pattern of automotive optoelectronics business development. The company's annual HUD shipments exceed 200,000 units, with AR-HUD ranking first in the domestic market share. In 2023, the company successfully obtained Jaguar Land Rover's HUD project and became the first Chinese HUD Tier 1 enterprise to enter the mainstream overseas vehicle brand. It has joined many new OEMs such as Geely, Dongfeng Rantu, and Changan Mazda, and has received more than ten designated projects. In terms of AR/VR, the company has been on the metaverse circuit for more than ten years, and has formed a full technical path layout. It has one-stop optical solution capabilities for various optical waveguide technologies from optical components to optical modules and near-eye empty space displays to solve optical hardware problems for end customers. The company focuses on the development of reflective and diffractive optical waveguide technology, integrates relevant resources, achieves technological breakthroughs in design, process and inspection around mass production, and strives to lay the foundation for industrialization. The company's systematic customer layout and industry-leading AR-HUD shipment volume have accelerated the progress of the company's HUD business from survival to high quality development, rapidly enhanced the company's popularity and brand value in the automotive field, achieved a strategic position in the automotive field, and opened up a new growth curve for the company.
Raise profit forecasts and maintain a “buy” rating: the company continues to focus on the three major businesses of optical components, automotive optoelectronics, and AR/VR. The company's mature products continue to maintain a stable trend, and emerging businesses such as thin-film optical panels continue to grow, and the company has long-term growth potential in the field of optics. In the future, the company is expected to benefit from the development wave of automotive intelligence and the continued release of new products such as microprisms, and the company's performance is expected to continue to grow. We have raised the company's profit forecast. It is estimated that in 2024-2026, the company's net profit to mother will be 798 million yuan, 996 million yuan, and 1,170 billion yuan respectively. EPS is 0.57 yuan, 0.72 yuan, and 0.84 yuan respectively, and the corresponding PE is 26X, 20X, and 17X respectively.
Risk warning: risk of exchange rate fluctuations, downstream demand recovery falling short of expectations, risk of technological innovation, risk of market competition.