24Q1 revenue and net profit to mother grew rapidly. On April 28, 2024, the company released its 2024 quarterly report. The company achieved revenue of 641 million yuan in a single quarter, an increase of 44.37% over the previous year, and achieved net profit of 65 million yuan to mother, an increase of 94.10% over the previous year. On the one hand, the company's revenue growth stemmed from a sharp year-on-year increase in sales of Hongtong's subsidiary. On the other hand, the company expanded its original business market, which contributed to sales growth.
Lay out production and sales globally to establish a global ecosystem. On the production side, according to the company's 2023 annual report, the company completed the expansion of production at the Thai factory, laid out other overseas factories such as Europe and North America, achieved global production and manufacturing, established a global ecosystem, and provided better localized services to global customers. On the sales side, the company has been deeply involved in overseas markets for decades and has a strong sales team in the US. Furthermore, in order to develop new customers, the company continues to add sales momentum to existing overseas channels, and has successively set up bases in Germany and Singapore to get closer to the market and serve customers.
Develop motherboard design capabilities and expand the application of new technologies such as AI. In January 2023, the company invested in Swissquote Technology. Ruixun Technology has two major business divisions, the Embedded Computer Application Platform Division and the Internet of Things Systems Division. It is the main partner for leading customers in the domestic self-service terminal and new energy segment. This investment further expands the company's product matrix and IoT solution development capabilities. We believe that in 2024, the company will further strengthen its business and R&D integration with the participating subsidiary Ruixun Technology, use its motherboard design capabilities in the field of the Internet of Things and edge computing to develop standard products, create leading products, and work together to expand overseas markets.
Increase the capital of Hongtong Technology to expand the automotive display business. On April 29, 2024, the company issued the “Notice on Capital Increase and Related Transactions to Holding Subsidiaries”. Hongtong Technology plans to increase the capital by 221 million yuan to purchase land and build new plants and equipment in Thailand, and the company will increase its capital to Hongtong Technology by 155 million yuan. From January to January 2024, Hongtong Technology's revenue (unaudited) was 235 million yuan, and net profit to mother (unaudited) was 1,5429 million yuan. As Hongtong Technology's domestic, European and American business continues to develop smoothly, Hongtong Technology is also gradually developing a certain competitive advantage in the automotive display industry. The company will also use this capital increase to further expand its in-vehicle display business and increase the company's revenue and profits.
Valuation and investment advice. As one of the leading companies for commercial intelligent interactive display equipment in China, the company has a wide range of product applications. We expect the company's main business revenue of 2024E-2026E to be 2,810 billion yuan, 3,694 billion yuan and 4.502 billion yuan, respectively, and net profit to mother of 323 million yuan, 360 million yuan and 433 million yuan. We used PE valuation and gave 2024E (PE) 18x-20x valuation, a reasonable value range of 35.46-39.40 yuan, and gave a “superior to the market” rating.
Risk warning: Market expansion falls short of expectations, downstream demand falls short of expectations, raw material prices rise.