Conclusions and recommendations:
Since the company released the OV50 series products, it has successfully secured domestic high-end smartphones. In particular, the V50H has successfully won the share of domestic flagship models such as Xiaomi, Huawei, Vivo, and Honor with its ultra-high speed focus capability and high dynamic range. With the acceleration of the company's R&D pace and the advancement of domestic substitution, we expect that 2H24 will have more domestic flagship models using the company's new 50 series products. Currently, the company only accounts for about 10% of the smartphone CIS market, and it is expected that it will continue to increase its market share in the future.
In addition to mobile phones, demand for CIS products continues to expand in the automotive sector and PC market. As a local leader in the CIS, the company has certain advantages in these fields. As the industry boom recovers, performance flexibility will continue to show. The current stock price is 23 times PE corresponding to 2026, giving it a “buy” rating.
The share of domestic high-end mobile phones is expected to continue to expand, and performance flexibility is gradually showing: the company's R&D pace continues to accelerate. Since the release of the OV50 series products, the V50H has successfully secured the share of domestic flagship models such as the Xiaomi 14, Huawei Pura70, vivo X Fold3, and Honor Magic6 with its ultra-high speed focus capability and high dynamic range. In 2023, the company's market share in the smartphone sector is only about 10%. With the promotion of domestic substitution, we are optimistic that the company's share in the mobile phone sector will continue to increase. At the same time, demand for the CIS is on the rise in the automotive and PC markets. Autonomous driving and AI PCs place higher demands on image sensors, which will further catalyze a recovery in the industry. The company's performance as a leading local CIS company is expected to grow rapidly along with the recovery in the industry.
1Q24's revenue and profit continued to improve significantly year over year: in 1Q24, the company achieved revenue of 5.6 billion yuan, up 30.2% year on year and 4.97% month on month; realized net profit of 550 million yuan, up 181% year on year, up 198% month on month; realized deducted non-net profit of 566 million yuan, up 2477% year on year, up 6975% month on month. In terms of gross margin, 1Q24's comprehensive gross profit margin was 27.9%, up 3.2 percentage points year on year and 4.9 percentage points month on month.
Profit forecast: The company's net profit for 2024-26 is estimated to be 2.5 billion yuan, 4.3 billion yuan, and 5.2 billion yuan, respectively. YOY will increase by 356%, 69% and 21%, corresponding to EPS of 2.09 yuan, 3.53 yuan, and 4.27 yuan, respectively. Corresponding to the current 24-26 PE valuation, 48 times, 28 times, and 23 times, respectively, the rating is given.
Risk warning: Demand for mobile phones and cars falls short of expectations.