Incident: The company announced on October 16, 2024 that the wholly-owned subsidiary Yibin Jimi received a designated notice for BAIC New Energy's development and will become the designated supplier of BAIC New Energy's vehicle projectors and screen assemblies to supply smart cockpit display products for its new models; it was announced on October 29 that it received a fixed letter for Marelli's project and will become a designated supplier of smart headlight related components; it was announced on November 14 that it received a designated development notice from a well-known domestic automobile manufacturer and will become the designated supplier for the customer's vehicle projector development and smart cockpit displays for its project Product; It was announced on November 18 that it received a designated development notice for two projects from a well-known domestic automobile manufacturer. It will become the designated development supplier of in-vehicle projectors and screens for the customer's two models, supplying them with smart cockpit display products.

The automotive business development progress has exceeded expectations and is expected to establish a second growth curve. According to the company's announcement, since October 16, 2024, the company has become a designated supplier of smart cockpit display products for 3 OEMs and a designated supplier of smart headlight related components for 1 OEMs. The automotive business has made substantial progress in the direction of smart cockpit displays and intelligent lighting, and customers include domestic and foreign car companies. The five projects are all expected to be mass-produced and supplied and contributed revenue in 2025. The expansion progress has exceeded market expectations. Referring to Guangfeng Technology's in-vehicle business, its 24H1 automotive optics business revenue was 0.241 billion yuan, mainly contributing to the M9, which entered the intensive mass production and delivery stage in March '24. As of the end of June, the number of M9 deliveries was around 0.05 million units, so the value of its in-vehicle projection bikes is expected to be around 5,000 yuan. Based on this, we believe that the automotive business is expected to become the company's second growth curve.

Investment suggestions: The company lays out DLP and LCD technology routes for the two brands, Jimi and Happy Planet, respectively, and launches products that meet the needs of different scenarios and price segments. At the same time, the company actively lays out overseas to implement overseas brand marketing and globalization strategies, and continues to promote overseas localization team building, which is expected to help further increase the company's market share; in addition, the company actively buybacks shares, showing confidence in the company and is optimistic about the company's long-term development. We estimate that the company's net profit for 24-26 will be 0.02/0.09/0.162 billion yuan, the corresponding EPS will be 0.28/1.29/2.31 yuan, respectively, and the current stock price corresponding to PE will be 313/69/38 times, respectively. Maintain a “Recommended” rating.

Risk warning: macroeconomic downturn, increased market competition, new product performance falls short of expectations, overseas market expansion falls short of expectations, automotive business performance falls short of expectations, etc.