Results grew rapidly in 2023. In 2023, the company achieved operating income of 1,020 million yuan, an increase of 50.16% over the previous year; net profit to mother was 203 million yuan, an increase of 54.29% over the previous year. In the first quarter of 2024, the company achieved operating income of 143 million yuan, an increase of 7.55% year on year; net profit to mother was 19 million yuan, a year-on-year decrease of 35.39%.

With video processing algorithms as the core, it provides specialized display control products in the field of video images. The company's main business covers three major products: LED display control systems, video processing equipment, and cloud networking players.

LED display control system: includes a receiver card and a transmitter, which are used together and are the core components of the LED screen display. The transmitter converts and transmits the video signal to the receiver card, which then drives the LED screen to display the video image. The company gradually expanded into the field of video processing and playback: it launched a series of video processing equipment with integrated control functions such as optical correction, color management, image stitching, matrix switching, multi-screen processing, cross-platform control, and ultra-high definition rendering. Cloud network player: Supports the production, arrangement, and cluster distribution of programs on cloud platforms or management software through various mobile communication devices such as mobile phones, tablets, and computers, as well as various networking methods such as 5G, 4G, Wi-Fi, and wired networks, to achieve unified management across multiple screens, multiple services, and regions.

Accelerate the expansion of overseas markets, and overseas markets strongly drive the company's growth. In 2023, the company adopted a direct distribution two-wheel drive model to further expand overseas markets. On the one hand, the company has strengthened direct sales channels and successfully increased the market share of receiving cards in overseas markets through in-depth cooperation with domestic and foreign screen manufacturers. On the other hand, on the basis of an increase in the market share of receiving cards, the company deepened market penetration and product distribution through distribution channels, accurately met the specific needs of project integrators, dealers, etc., and provided customized solutions according to the actual situation of the project, effectively promoting the growth of sales and market share of video processing equipment.

The company's market share has been growing steadily. In 2023, North America accounted for 59.34% of overseas revenue, Europe accounted for 20.63%, Asia accounted for 13.13%, and other regions accounted for 6.73%. Overseas revenue was 136 million yuan, an increase of 94.50% year over year.

Continue to invest in R&D, lead MLED production intelligent innovation, and launch self-developed chips. Micro/Mini LED intelligent core inspection equipment (Mica): Through the mutual cooperation of machine vision algorithms, intelligent color correction algorithms, and brightness sensing algorithms, it is possible to achieve intelligent and unmanned management of the entire MLED display correction process. In addition to solving brightness issues, poor screen viewing angles and ink color inconsistencies can also be quickly detected and dealt with in a timely manner. Introducing the Colorlight Vivid M10 self-developed chip: a highly integrated receiver card chip with a maximum payload resolution of 512*512 @60Hz in a single chip. The chip uses advanced process and is equipped with the company's unique image processing technology to improve the display effect in various aspects such as grayscale, uniformity, and color, to meet the needs of integrated and intelligent development of the LED industry.

Profit forecasts and investment recommendations. We believe that the company is deeply involved in the field of video display control, has a remarkable first-mover advantage, has a forward-looking layout overseas, and is expanding smoothly in overseas markets. Overseas market demand is strong, and domestic market demand is expected to continue to rise in 24-26. It is expected that the company's three major businesses of video processing equipment, LED displays, and cloud network players will continue the rapid growth trend of 23 years, giving 24-26 revenue growth rates of 40%/38%/34%; 25%/23% 20%; 40%/38%/35%, respectively.

The gross margin of each business has maintained a relatively stable trend.

We estimate that the company's revenue for 2024-2026 will be 13.45/17.58-2250 million yuan, respectively, and net profit to mother will be 2.70/3.54/463 million yuan, respectively, and EPS will be 2.84/3.72/4.87 yuan respectively, giving a 6-month reasonable value range of 56.80-71.00 yuan for the first time coverage.

Risk warning. The company's business progress falls short of expectations, and industry policy risks.