Event: The company released its report for the third quarter of 2023. In the first three quarters of 23 years, the company achieved revenue of 1,124 billion yuan, an increase of 9.79% over the previous year; realized net profit of 66 million yuan, a year-on-year decrease of 14.18%; and realized net profit of 61 million yuan, a year-on-year decrease of 16.30%. On a quarterly basis, Q3 achieved revenue of 472 million yuan, a year-on-year increase of 13.13%, a year-on-year increase of 29.67%; realized net profit of 29 million yuan, a year-on-year decrease of 29.53%, a year-on-year increase of 14.61%; and realized a net profit of 29 million yuan, a year-on-year decrease of 36.67%, and a year-on-month increase of 10.00%.
Q3 gross margin improved month-on-month, and high capital investment enabled production capacity growth: the company's gross margin for the first three quarters of 23 years was 18.40%, +0.81 pcts; net profit margin was 5.85%, -1.64pcts year over year. Q3 gross margin was 19.16%, y-0.30pcts, +1.62pcts month-on-month; net margin was 6.20%, -3.76pcts, y-0.82 pcts month-on-month. In terms of expenses, the company's sales, management, R&D, and financial expenses in the first three quarters were 1.29%/4.33%/8.01%/-1.20%, respectively. The year-on-year changes were +0.14/ -0.39/+0.72/+2.27pcts, respectively. Q3 The company actively increased capital investment, and intangible assets increased by 290.65%, mainly by obtaining land use rights for plots in Kunshan and Huai'an. To help increase production capacity, the company is installing more machinery and equipment, and projects under construction increased by 155.01% over the same period last year.
Leading automotive display company, multi-point automotive business layout: With the further increase in the penetration rate of new energy vehicles and smart cockpits, vehicle displays are increasingly developing in the direction of standardization, larger screens, and multiple screens. The number of bicycle screens installed is increasing year by year, and demand for in-vehicle displays continues to grow. Faced with the above trends in the automotive display industry, the company increased its R&D investment. The company's R&D expenses for the first three quarters of 23 years were 9.0361 million yuan, an increase of 20.71% over the previous year. The company has become one of the world's leading companies in the field of automotive backlight display modules. The company's 35.6-inch and 47.9-inch curved oversized automotive backlight display modules have been mass-produced, and 55.8-inch and other curved oversized automotive backlight display modules are now being continuously tested as pre-mass production models. At the same time, the company's customer acquisition in the automotive sector is progressing smoothly. The company stated on the interactive platform that the company's electronic rearview mirror products have already received fixed-point orders from leading domestic new energy car companies, as well as corresponding fixed-point orders from other brand companies; the company has business cooperation with Huawei Motors through Tier 1.
Benefiting from the boom in demand for new displays, convertible bond issuance helps long-term growth: According to the company's convertible bond prospectus, according to data from Omdia, the International Automobile Manufacturers Organization, and LMC, the number of bicycle screens is expected to increase to 2.47 by 2024; Global Market Insights predicts that the market size of the automotive display sector will reach 24 billion US dollars in 2025. In 2023, the company issued convertible corporate bonds to unspecified targets and raised 49,000 million yuan for the “Lightweight Vehicle New Display Component Project”. After the construction of the project is completed, the company will have an annual production capacity of 4.33 million lightweight structural parts and 1.85 million display modules. The implementation of the fund-raising project is expected to enhance the company's manufacturing capacity in the field of new display technology products and further consolidate the company's leading position in the market.
Maintaining the “accumulation” rating: The company is deeply involved in the field of backlight display modules. Through continuous technological innovation and deepening integrated production capacity, the company continues to build high-quality products with leading technology, excellent quality and comprehensive service, and has become one of the leading companies in the field of automotive backlight display modules in the world. As fund-raising projects continue to advance, the company is expected to benefit from the continuous expansion of new display applications, opening up new space for performance growth. The company's net profit for 2023-2025 is estimated to be 133 million yuan, 178 million yuan and 248 million yuan respectively, EPS is 0.63 yuan, 0.83 yuan and 1.16 yuan, and PE is 31X, 24X, and 17X respectively.
Risk warning: implementation risks of convertible bond fundraising projects, downstream demand falling short of expectations, risk of falling inventory prices, risk of market competition, risk of exchange rate fluctuations.