组网业务积极调整，新业务领域拓展加速。公司在聚焦现有业务龙头地位的同时，兼顾产业链延伸，积极调整、拓展其他业务。其中：1）组网业务主要包含机顶盒、路由器、智能门锁、AI 音箱等产品，竞争加剧情况下盈利承压，公司积极进行业务调整；2）公司在聚焦现有业务龙头地位的同时，兼顾产业链延伸，积极拓展光通讯器件这一全新领域，并已构建光通讯器件、模块、芯片的垂直产业链雏形，进一步拓宽业务版图。Incident: The company released its 2024 three-quarter report. In the first three quarters of 2024, the company achieved revenue of 16.16 billion yuan, an increase of 27.4%; net profit to mother was 1.37 billion yuan, up 7.9% year on year; after deducting non-net profit of 1.31 billion yuan, an increase of 17.3% year on year. Looking at a single quarter, Q3 achieved revenue of 6.64 billion yuan, a year-on-year increase of 34.1%; net profit to mother 0.46 billion yuan, a year-on-year decrease of 14.1%; net profit after deducting 0.45 billion yuan, a year-on-year decrease of 7.8%.
TV shipments are +40%, and the LED industry chain is growing steadily. According to Lotu Technology data, the company shipped 4.4 million televisions in 2024Q3, an increase of 40% over the previous year. The main driving force for Q3 revenue growth was mainly due to North American customers preparing goods during the Q4 peak season; the LED industry chain grew steadily year on year, and the revenue growth rate is expected to maintain the H1 level (+30%).
Non-core businesses drag down profitability, and multiple factors affect net interest rates. The company's 2024Q3 gross margin decreased by 4.3pp to 14.4% year-on-year. We believe that the main reason was not the decline in the profitability of the core business. On the one hand, the company experienced asset impairment losses of 75.805 million yuan due to business adjustments. Compared with 47.052 million yuan asset impairment losses during the same period, income tax was 63.98 million yuan, an increase of 57.7 million yuan over 2023Q3; on the other hand, exchange gains and losses due to fluctuations in the US dollar exchange rate also affected the company's Net profit on futures. In terms of cost ratio, the company's sales/management/finance/R&D expenses were 0.9%/0.8%/0.5%/3.5%, respectively, -0.6 pp/+0.3 pp/-0.3 pp/-0.3 pp compared to the same period. Looking at the net interest rate, the net interest rate of the 2024Q3 company was 7%, year-on-year -4.1pp.
The networking business has been actively adjusted, and the expansion of new business areas has been accelerated. While focusing on the current leading position in the business, the company takes into account the extension of the industrial chain and actively adjusts and expands other businesses. Among them: 1) The networking business mainly includes products such as set-top boxes, routers, smart door locks, and AI speakers. Profits are under pressure when competition intensifies, and the company actively adjusts its business; 2) While focusing on the current leading position in the business, the company actively expands the new field of optical communication devices, taking into account the extension of the industrial chain, and has built a vertical industrial chain prototype for optical communication devices, modules, and chips to further broaden the business layout.
Profit forecasting and investment advice. The company's core business performance is excellent. 2024Q3's TV ODM volume ranks second in the industry, and the LED industry chain has been growing steadily over the same period last year. The company's 2024-2026 EPS is expected to be 0.41 yuan, 0.48 yuan, and 0.57 yuan respectively. The company will be given 10/20 times PE for the 2025 ODM sector/LED sector, corresponding to a target price of 7.1 yuan, maintaining a “buy” rating.
Risk warning: Risks such as overseas demand falling short of expectations, increased competition, and price reductions in the LED industry chain.
Today, after hitting the high near 24,000 in the early session and entering bearish positions, the index fell sharply by nearly over 600 points, immediately recouping yesterday's losses significantly.
Moreover, today it broke the new high again, reaching a maximum of 24,076, but by the end of the market, it fell back by about 70 points, producing a bearish candle. The current trend has not yet been broken, but from the previous low until now, it has risen close to 6,000 points. It is believed that those with positions can continue to hold until there is a clear trend reversal for profit-taking. Those without positions can wait for a pullback to get in. Actually, it is hoped for a quick pullback, as it allows for entry and also provides a healthy breath.
Currently, the outlook remains the same as before. It is believed that even if there is a pullback, it shouldn't be too deep. However, if Futures fail to stabilize and close below 22,350, there may still be room for decline. The chance of Futures falling below 21,400 in the short term should be low, so it is considered that if a significant pullback occurs, it presents a good opportunity to incrementally go long. Recently, there has been a consistent approach to not hold positions overnight, only focusing on immediate trades, as there is no high chasing and no casual short selling.
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