Incident: On February 1, 2024, the company officially signed the “State-owned Land Use Rights Reserve Agreement” with the Chancheng District Land Reserve Center of Foshan City and the Zumiao Subdistrict Office in Chancheng District of Foshan City to register and store the Fenjiang North Road plot in batches over three years. On December 25, 2024, the company received an initial compensation of 381.7791 million yuan from the Land Reserve Center of Chancheng District, Foshan City. According to preliminary estimates, it is expected to increase the company's net income by 0.295 billion yuan in 2024. The remaining income will be confirmed in the following year. The final revenue is based on the audited data.
Investment suggestions: The company's main lighting business is stable and actively expanding the lighting layout: 1) The automotive lighting sector has acquired Nanning Lookout while expanding the production capacity of headlight modules, and has established cooperation with OEMs such as Ideal, Changan, BAIC, and Geely; 2) The emerging lighting sector focuses on smart street lights and marine lighting. Currently, the business model has run through, and in-hand orders are expected to grow; 3) Merger and acquisition integration of midstream LED packaging, which is expected to continue to increase its share under the scale effect. According to the company announcement, we assume that the company will be able to obtain a net revenue contribution of 0.295 billion yuan per year in 24-26 three-year land collection and storage, so we raised our performance. We expect the company's net profit to mother for 24-26 to be 0.6/0.7/0.76 billion yuan (previous value 0.32/0.39/0.45 billion yuan), respectively. The corresponding PE is 16.1x/13.9x/12.7x, maintaining the “buy” rating.
Risk warning: Net income from land collection and storage falls short of expectations; product structure upgrades fall short of expectations; new product promotion falls short of expectations; raw material price fluctuation risk New business progress falls short of expectations; progress in new technology research and development falls short of expectations; progress in industrial chain integration falls short of expectations; risk of fluctuations in raw material prices; risk of exchange rate fluctuations; risk of accounts receivable recovery.