Incident Overview
According to the semi-annual report disclosed by Alto Electronics, the company achieved revenue of 0.333 billion yuan in the first half of 2024, an increase of 3.59% over the previous year, and achieved net profit of 2.3656 million yuan to mother, a year-on-year decrease of 87.08%.
Financial aspects: Performance was affected by engineering business repayment issues. Overseas business growth was improving, and the company's net profit declined mainly due to macroeconomic and industry factors, and the wholly-owned subsidiary Qianbaihui's domestic smart landscape lighting engineering business development and repayment fell short of expectations, leading to large losses, and an increase in accrued credit impairment losses. During the reporting period, the company further optimized its business structure and strengthened its overseas market layout. In the first half of the year, overseas market revenue accounted for about 50% of total revenue; the amount of new orders signed in the overseas market was 155.4758 million yuan, up 17.68% year on year, but due to the long delivery cycle of some projects, it achieved operating income of 166.6272 million yuan, an increase of 0.92% year on year. At the same time, the company was deeply involved in domestic dominant industries, and the domestic market achieved revenue of 166.8705 million yuan in the first half of the year, an increase of 166.8705 million yuan over the previous year 6.40%
Business structure level: New orders in the sports, film and television sector increased by more than 50%, and creative digital revenue increased by nearly 200%. In the first half of 2024, the company signed new orders of 0.295 billion yuan, including new leasing and sports orders of about 83 million yuan, an increase of 57.02% over the previous year. As a sports year in 2024, the company actively grasped market opportunities, won multiple stadiums and sports events, and successfully won the bid for LED display systems and operation projects for a major sports event in ASEAN. The company is deeply involved in the film and television industry, mainly focusing on the two fields of movie playback and virtual shooting, and is committed to providing customers with professional and complete solutions. During the reporting period, the company stepped up its market development efforts in the film and television industry, signing new orders of about 79 million yuan, an increase of 65.10% over the previous year; achieved operating income of 0.102 billion yuan, an increase of 30.23% over the previous year, further consolidating the company's dominant position in the film and television industry. In terms of virtual shooting, in the first half of 2024, the company undertook 9 XR/VP virtual studio projects. By the end of the reporting period, the company had undertaken a total of 76 XR/VP virtual studio projects around the world. In the first half of the year, Creative Digital signed new orders of about 17 million yuan; achieved operating income of 7.9308 million yuan, an increase of 192.96% over the previous year.
Industry level: Cinema recovery and superposition equipment update bonuses. Looking forward to the implementation of movie screen terminals. China Film Technology, a leading company in the domestic film and television equipment industry, launched the world's first “China Film CINITY LED movie screen projection system” supporting 4K/120 frame high format. By the end of the reporting period, China Film CINITY had 4 LED movie screen products passed DCI certification. As its core partner, as of the company's interim report, China Film CINITY LED movie screen projection systems had already passed DCI certification. Launched, a total of 20 LED movie screens have been delivered, and more projects are being implemented at an accelerated pace. According to data from the National Film Administration, the 2024 summer (June-August) movie box office was 11.643 billion yuan, and many high-quality films drove the recovery of the cinema industry. In May, six departments jointly issued “Implementation Measures to Promote Equipment Renewal in the Field of Culture and Tourism”, which deployed equipment updates for the film industry and the UHD equipment industry. We believe that the recovery of the cinema industry and the equipment renewal policy will significantly facilitate the launch of the company's CINITY LED movie screen terminals and contribute to the company's performance growth.
Investment advice
Performance during the reporting period was affected by repayments. We adjusted our previous profit forecast. We expect the company to achieve operating income of 0.72/0.84/0.94 billion yuan in 2024-2026 (0.75/0.85/0.94 billion yuan in the previous period), and realized net profit of 0.03/0.06/0.1 billion yuan (the previous forecast was 0.05/0.08/0.1 billion yuan), and EPS was 0.05/0.10/0.16 yuan, respectively ( (The previous forecast for 2024-2025 was 0.07/0.13/0.16 yuan), and the closing price on August 30 was 5.57 yuan. The PE corresponding to the current stock price was 119/57/36 times, respectively, maintaining the “gain” rating.
Risk warning
In December 2021, the company received a decision on corrective measures ordered by the Shenzhen Securities Regulatory Bureau; industry demand recovery falls short of expected risks, order execution pace falls short of expected risks, project repayment risks, and AI technology supervision risks.