The company released its three-quarter report in 2023, with revenue and net profit of 278 million yuan and 34 million yuan respectively in the third quarter, with month-on-month growth of more than 20%. Notebook computer sales pick up quarter by quarter, and the company's net profit in the fourth quarter is expected to achieve a year-on-year increase. Lenovo shows AI PC for the first time and may lead the trend of PC replacement in the future. The company is the core supplier of Lenovo Group Limited's notebook products and is expected to fully benefit in the future. Looking to the future, under the trend of lightweight consumer electronics, carbon fiber composites are expected to continue to infiltrate into notebook computers and accelerate the introduction of folding screen mobile phones and VR/MR head display devices. We are optimistic about the development of the company's carbon fiber business, and it is expected that the new products will expand rapidly in the future, leading to the rapid growth of revenue and net profit.
Business profile: the company released its three-quarter report in 2023, with revenue of 278 million yuan in the third quarter, an increase of 4.70% over the same period last year, an increase of 24.66% over the previous year, and a net profit of 34 million yuan, down 4.1% from the same period last year and an increase of 20.79% over the previous year. Taken together, in the first three quarters of 2023, the company achieved revenue of 705 million yuan, down 7.79% from the same period last year, and net profit of 87 million yuan, down 5.82% from the same period last year.
Laptop sales pick up quarter by quarter, and the company's fourth-quarter net profit is expected to rise year-on-year. According to Canalys statistics, global PC shipments totaled 65.6 million in the third quarter of 2023, an increase of 8 per cent month-on-month. Among them, Lenovo shipped 16.031 million Q3 personal computers, an increase of 13% month-on-month, with a global market share of 24.5%, an increase in 1.6pcts compared with the second quarter. Taking into account PC inventories and the gradual economic recovery, Gartner expects the PC market to grow again from the fourth quarter of this year. The company is the core supplier of Lenovo Group Limited's notebook products, serving large customers in depth, and is expected to fully benefit from the pick-up in sales of key customers. Considering the low level of quarterly net profit due to the impact of the epidemic in the fourth quarter of last year, the company's 23Q4 net profit is expected to achieve a high year-on-year increase.
Lenovo shows AI PC for the first time, and it may lead the trend of PC replacement in the future. Lenovo Group Limited held the annual global innovation event Tech World from October 24 to 25. This year's theme is "AI for All". At the conference, Lenovo Group Limited demonstrated his vision in a number of artificial intelligence fields for the first time, including artificial intelligence large models, artificial intelligence solutions, artificial intelligence infrastructure and artificial intelligence devices. Lenovo's first AI PC heralds a deeper integration of artificial intelligence and terminal devices. AI PC not only has powerful computing power, but also has the function of deep learning, can predict tasks according to users' thinking patterns, and independently find solutions to provide a more personalized experience. Group Intelligence Consulting predicts that 2024 will be the first year for AI PC large-scale shipments, and the global PC industry will steadily enter the AI era in the next five years. Canalys predicts that AI PC shipments will account for 19 per cent of all PC shipments in 2024 and are expected to account for about 60 per cent of all PC shipments by 2027.
Nuggets consumer electronics carbon fiber blue sea, the company has a broad space for growth. Carbon fiber has many advantages, such as low density, high strength, high modulus and so on. The composites made of high quality carbon fiber raw materials and good resin matrix have excellent mechanical properties and are the preferred materials for the thinning of consumer electronics. At present, carbon fiber composites have been used in the A side of notebook computers, mainly for the high-end market. Under the background of the gradual decline in the price of carbon fiber raw materials and the gradual popularity of AI PC, we believe that the market space for notebook carbon fiber backplane is gradually opening up, and the company has mastered the core technology of making carbon fiber structural parts, which is expected to benefit deeply in the future. Under the trend of lightweight, folding screen mobile phones and MR head display devices are also expected to accelerate the introduction of carbon fiber materials.
The company has mastered the core technology of making carbon fiber structural parts, and notebook products are the first to break foreign monopoly. At present, the company's carbon fiber products are mainly used in the A side of Lenovo's high-end notebook models. With the development and design of customized notebook computers with customers, it is expected to gradually expand to D and other models. In addition to Lenovo, the company is also actively opening up other consumer electronics customers. In the field of folding screen, the company is actively developing carbon fiber brackets and flexible screen backboards, which are expected to be mass-produced on a large scale in the future.
Risk factors: carbon fiber product development is not as expected; market competition is intensified; exchange rate fluctuation risk; the recovery of the consumer electronics industry is not as expected; the risk of relative concentration of customers; new products, new application expansion is not as expected; capacity construction progress is not as expected.
Profit forecast, valuation and rating: Everbright Tongchuang is a scarce supplier of carbon fiber structures for consumer electronics in China. Under the guidance of the strategy of "deep service to customers", the company successfully launched carbon fiber backplane products in 2020 and passed Lenovo Group Limited certification, breaking the exclusive monopoly of well-known materials companies in Japan. Under the trend of lightweight consumer electronics, carbon fiber composites are expected to continue to infiltrate into laptops and accelerate the introduction of folding screen mobile phones and VR/MR head display devices. We are optimistic about the development of the company's carbon fiber business, and it is expected that the new products will expand rapidly in the future, leading to the rapid growth of revenue and net profit. According to Canalys statistics, global shipments of 2023Q1-3 Lenovo Group Limited personal computers reached 42.96 million units, down 17.8% from the same period last year. Although Q3 increased by 13% month-on-month, the pace of recovery in consumer electronics demand was still less than expected. We adjusted the company's EPS forecast for 2023-2025 to 1.69max 2.74max 3.58 yuan respectively (the original forecast was 2.01max 2.994.06 yuan) The current price corresponds to the PE of 32.4x/20x/15.3x from 2023 to 2025.