This report system reviews the impact of 1LCD technology changes experienced by the projection industry from 2022 to 2024. As upstream chips actively cut prices and downstream projection brands accelerate product innovation, superimposed national subsidies to release consumer demand and DLP projection once again ushered in a period of opportunity. Since 2024, Jimi will strategically focus on investing in overseas markets and the automotive sector, acquiring the Aladdin business in Japan, entering mainstream offline supermarket channels in Europe and the US, and gradually entering the volume stage. Furthermore, the automotive business has also begun to gain targeted cooperation from well-known car companies, opening up a new business situation.

On November 8, the company further responded to the central bank's reloan policy to repurchase shares and obtained 0.172 billion financial support for a special stock repurchase loan, showing confidence in future development. Once again, we are reminding investors to pay attention to the company's turnaround and upgrade the investment rating to “Highly Recommended”.

Industry: Upstream chip costs are being reduced, DLP is breaking the game and seeking change. Since 2021, the experience of 1LCD projection has improved rapidly with the gradual spread of closed optical machine technology and the update of light-transmitting materials. Gradually, the entry-level price band in the home projection industry has gained voice. At the same time, the supply-side shortage of DMD chips, which has lasted more than a year since the second half of 2021, has further boosted the popularity of 1LCD technology. With the gradual expansion of 1LCD's share, the DLP industry chain made concerted efforts to actively resist the continuous upward penetration of 1LCD using the 0.23” DMD product platform. After TI actively reduced the price of chips, it gradually formed a competitive pattern of “divided by water” around the 1,500 yuan boundary. According to Lotu statistics, the share of 2023Q3 projectors in 1LCD fell 0.7 pct year on year to 76% for the first time, and high-end projectors ushered in a reversal opportunity.

Domestic: National supplements are driving a reversal in domestic demand, and Douyin's popularity is helping to compete for import traffic. In the first three quarters of 2024, industry sales fell 9.7%, and sales fell 5.9%; after the full rollout of consumer goods trade-in in October, projectors were gradually included in the national supplement catalogue. During the Double Eleven period, industry sales increased 21% year-on-year, sales increased 9%, and the share of DLP high-end projection rebounded to 47%. Furthermore, as a leader, Jimi is actively seeking ways to break the game. The product side has built a complete product matrix with mid-range and high-end Dual Light 2.0 eye protection three-color laser technology+entry-end Play 3/5 explosive+1LCD+LCOs. The channel side actively embraces Douyin incremental channels, and completes the drainage of traditional e-commerce platforms and offline channels while expanding sales scale. Douyin's hit Play 3 and iterative Play 5 are expected to continue to gain strength in the second quarter, and profit-side inventory clearance of high-priced 0.23” DMD chips and improvements in explosive iteration costs are expected to drive up profits.

Overseas: The European market is expanding steadily, and the North American offline market has entered the harvest period. As a domestic projection manufacturer that first set up overseas, Jimi completed Google certification earlier and completed coverage of mainstream content through the Android TV system; the channel-side Japanese market gradually rationalized channel growth after completing the privatization of Aladdin's business, the European market successfully opened up the market through several heavyweight offline chain channels such as MediaMarkt and Saturn, and the North American channel entered the large-scale store entry stage through trial sales Q2, from leading online share to offline BestBuy/ Walmart /Sam and others have blossomed a bit, and overseas markets have entered the harvest period.

Upgraded to “Highly Recommended” investment rating. Considering that the company's domestic projection market is clear and the national supplement is driving overall sales, the expansion of overseas business channels has reached an inflection point, and new product changes are expected to recover rapidly after the profit-side high-priced chip inventory is cleared. We expect the company's net profit to return to 0.21 billion yuan and 0.45 billion yuan in 2025-2026. Referring to Guangfeng's PS valuation, we upgraded the company to a “Highly Recommended” investment rating.

Risk warning: Domestic demand countries are unable to make up for the expected risk, overseas channel expansion falls short of expectations, and the performance of models related to the automotive business falls short of expectations.