Matters:
The company achieved operating income of 3.56 billion yuan in 2023, -15.8% year-on-year, and realized net profit of 120 million yuan, or -76.0% year-on-year. Looking at a single quarter, 23Q4 revenue was 1,135 billion yuan, -15.31% year-on-year, and net profit to mother was 34 million yuan, -80.02% year-on-year. 24Q1 revenue was 825 million yuan, -6.59% year on year, and net profit to mother was 14 million yuan, -72.57% year over year. The company plans to pay a cash dividend of 3 yuan for every 10 shares.
Commentary:
Domestic sales revenue is under pressure from the industry, and the growth rate of overseas markets and new products is impressive. In 2023, the performance of the smart micro investment market was divided, and the technical game and product structure declined markedly, and Jimi's business was under pressure with the industry. By dividing the revenue structure, the company's revenue growth rates for long-focus projection, ultra-short focus projection, and innovative products in 2023 were -21.5%, +28.8%, and +18.3%, respectively. Among them, telephoto projection was the main product accounting for 80% of revenue, which dragged down the decline in revenue due to weak domestic demand and intense competition. According to data disclosed in the annual report, the volume and price of the company's telephoto projection fell 13.6% and 9.2% respectively in '23. By region, domestic and overseas revenue in '23 was 2.62 billion yuan and 9.1 billion yuan respectively, -23.1% and +15.6% compared with the same period last year. The company's export sales account for more than 25%. With the abundance of products in overseas markets, the deepening of market education, and the steady expansion of channels, it is expected to drive the company back to the development channel. The 24Q1 projection industry continued the previous trend. Sales of smart projection (excluding laser TV) under the Rotu caliber were -5.1% year-on-year, and the DLP share continued to shrink. Affected by this, Jimi's Q1 revenue fell 6.6%, but overseas, Douyin and other channels are expected to maintain high growth. As the subsequent low base effect becomes apparent, it is expected to return to positive growth.
The downturn in the product structure is dragging down profits, and we look forward to subsequent restoration. The company's net profit to mother in '23 was -76% year-on-year. Among them, Q4 fell 80%. Profit was significantly weaker than revenue mainly due to a decrease in the average price of products and changes in the sales structure, and an increase in the share of low-margin products. In terms of profitability, the company's gross margin for 23 years was 31.3%, down 4.7 pcts from the previous year. By region, domestic and overseas sales gross margins were 26.7% and 44.6% respectively. The gross profit margin of export sales was significantly superior to domestic sales. In terms of expenses, due to declining revenue and the rigidity of some expenses, the expense ratio for the 23-year period of the company was 32.2%, +6.2 pct compared to the previous year. Under the combined influence, the company's net sales margin in '23 was 3.4%, -8.5pct year-on-year. In 24Q1, the company's profit continued its downward trend. The net interest rate was 1.7%, down 4.2 pcts year on year.
We believe that as the product structure stabilizes and the share of export sales increases, the company's profitability is expected to recover in the future.
The overseas layout is gradually being improved, and attention is being paid to the effectiveness of the brand going overseas. Due to the rapid evolution of the technology path, the intelligent micro projection pattern is fiercely competitive, yet Jimi has always maintained its leading position in the domestic projection industry. According to IDC data, the share of Jimi shipments in the domestic high-end projector (excluding single-chip LCD) market reached 33% in 2023, and has remained number one for 6 consecutive years since 2018. In terms of overseas layout, the company is firmly implementing the brand's strategy of going overseas and improving the coverage of overseas sales regions and channels. In 2023, Jimi products have entered the main offline retail channels in Europe, the United States, Japan and other markets. According to Lotu Technology's statistics, in 2023, Jimi will become the second largest projector market in the world in terms of shipment volume and number one in the home projection market. We highly expect the company to be a leader in smart projection brands, and overseas markets are expected to open up space for the company's growth.
Investment advice: Considering the fierce competition in the industry and the declining product structure, we lowered the 24-25 net profit forecast to the mother to 175/246 million yuan (original value was 612/701 million yuan), and the 25-year forecast was 296 million yuan, corresponding to PE 39/28/23 times, respectively. Referring to the absolute valuation method, the company's target price was lowered to 130 yuan, corresponding to 52 times PE in 24 years, and lowered to a “recommended” rating.
Risk warning: Market competition has intensified dramatically, demand for terminals falls short of expectations, and overseas progress falls short of expectations.