Incident: 24H1 signed a cooperation framework agreement with Thunderbird Innovation. The two parties jointly funded the establishment of a joint venture with a registered capital of 15 million yuan. Among them, the company plans to use its own capital to invest 3 million yuan, hold 20% of the shares in the joint venture, and Thunderbird holds 80% of the shares. The joint venture will plan to develop first-generation products for shooting glasses and audio+AI glasses, and earn revenue through authorized fees. In this cooperative project, the company will be responsible for offline channel sales and promotion, participate in product development and design, and have common decision-making power on key strategies such as products, channels, and marketing. The cooperation of heaven is expected to drive the creation of explosive products.

The combined expansion of the layout is expected to replicate Meta Ray-Ban's successful path. According to Sina VR quoting the Wall Street Journal, Meta is in negotiations with Ray-Ban maker EssilorLuxottica to acquire around 5% of its shares. According to the nutshell, the second-generation smart glasses Ray-Ban Meta, developed by Meta and Ray-Ban in collaboration with Ray-Ban, have sold more than 1 million units, proving the potential for cooperation between technology companies and strong brands & channel eyewear companies, which is expected to jointly shape explosive products with both functional and fashion attributes. Ray-Ban has 257 direct-run stores in the US, and a large number of non-directly-managed certified stores also have Ray-Ban Meta sales qualifications. High store penetration increases consumer offline experience opportunities. PhD's offline channel network is mature. As of the end of 24Q2, there were 501 directly-managed stores and 29 franchise stores; Thunderbird is a leader in domestic smart glasses technology. Its consumer-grade AR glasses shipments have ranked first in China for two consecutive years. In 2023, the domestic online shipment share was 37.4%. At the same time, it also lays out BirdBath and optical waveguide technology, and has self-developed and mass-produced optical engines. The cooperation between the two sides is expected to replicate overseas success.

The forward-looking layout of smart glasses has obvious channel advantages. Myopia lenses are the core part of smart glasses implementation. Currently, magnetic/plug-in devices are the mainstream of the market. Large-scale eyewear channel providers have significant advantages in smart glasses front-end design, pre-sales display and experience, online and offline sales channels, and after-sales service.

As one of the earliest eyewear retailers with AR glasses, Dr. Glasses operates in 24 provinces, autonomous regions, and municipalities across the country. It has established joint ventures with shopping malls, supermarkets and other channels to establish optometry centers, and has cooperated with hospitals to set up optometry centers. The channel advantage is obvious. With the number of nationalized stores and professional eyewear services, the company continues to explore new smart glasses tracks and provides inspection services for smart glasses lenses. Currently, it has established stable partnerships with leading smart glasses brands in the industry, Xingji Meizu, Li Weike, Thunderbird Innovation, and ROKID. As the smart glasses industry continues to expand, the company is expected to stand out by relying on strong channel strength and product strength.

Profit forecast and investment rating: We expect the company's net profit to be 0.14 billion yuan, 0.17 billion yuan, and 0.2 billion yuan respectively in 2024-2026, and the corresponding PE is 34X, 28X, and 25X, respectively, maintaining a “buy” rating.

Risk warning: Risk of macro-environmental fluctuations, increased industry competition, smart glasses research and development falling short of expectations.