Revenue and profit increased steadily from quarter to quarter: in 2023, the company achieved revenue of 174.54 billion yuan, yoy -2.2%; net profit to mother of 2.55 billion yuan, yoy -66.2%; net profit loss after deducting non-return to mother of 630 million yuan. Operating income and net profit after deduction from mother achieved quarterly growth, and stable operation was maintained throughout the year. Main reasons: 1) In the first three quarters of 2023, TV product prices rose markedly, IT product prices gradually stabilized, and the industry showed a trend of volume and price recovery; in the second half of Q4, product prices declined slightly, and industry fluctuations gradually subsided. 2) The company's flexible AMOLED continues to drive high-end demand. The annual shipment volume increased sharply to 120 million pieces, successfully achieving the annual shipment target. The profitability of mature production lines improved significantly year-on-year, and invested in the construction of the first 8.6-generation AMOLED production line in China to maintain its leading competitive advantage. 3) In 2023, the company's display business revenue decreased 2.1% year on year, IoT innovation business revenue increased 13.3% year on year; sensor business revenue increased 32.13% year on year; MLED business revenue increased 81.4% year on year; and smart medical business revenue increased 26.7% year on year.
The LCD panel leader position is stable, and the OLED penetration rate continues to increase: 1) The company continues to maintain its leading position in the display market, and LCD continues to rank first in the world in terms of overall product shipment volume and shipping area in the five major major fields. The LCD field continues to optimize the product structure, maintain breakthroughs in high-end flagship products, achieve the highest global shipment volume for oversized products, and ADS Pro products have achieved breakthroughs in the high-end TV market. As the supply pattern continues to lean towards mainland leaders and the gradual improvement of superimposed demand, LCD prices are expected to continue to pick up, driving the company's performance to continue to improve. 2) The company's flexible AMOLED has outstanding competitive advantages, focusing on promoting the rapid penetration of high-end products such as LTPO, folding, and COE. The company's flexible AMOLED shipments are expected to maintain significant growth, and continue to improve product structure and profitability, becoming a new performance growth point for the company.
Fully lay out the “1+4+N+ Ecological Chain” and seize the big opportunities in the era of intelligent IoT: 1) As a leader in the semiconductor display industry, the company focuses on four high-potential waterways to promote high-quality development: IoT innovation/sensors and solutions/smart medical business development; Huacan Optoelectronics helped MLED business rapidly improve. The company completed strategic integration of listed platforms, quickly laid out key aspects of MLED chips, and completed the initial layout of the Asia-Pacific and European markets; the high-potential waterway is expected to become a new revenue aid in the future. 2) Continuously promote the transformation of the Internet of Things, and market expansion results have emerged: the operating quality of TV terminals continues to improve, MNT terminal shipments rank among the top three in the world for the first time, IoT terminals continue to develop market segments, achieve the highest global shipment volume in market segments such as splicing and advertising machines, and the number one in the world for the first time; continue to expand customers and continuously enhance market influence.
Profit forecast and investment rating: Due to the panel industry's overall price increase and downstream recovery falling short of expectations in 23, we are still optimistic that the company will benefit from the panel industry cycle reversal and rapid layout of the MLED circuit. The company's net profit for 2024-2026 is 45.5/90.4/15.5 billion yuan, respectively (the value was 143.2/18.92 billion yuan before 24/25). The PE corresponding to the current market value is 36/18/10 times, respectively, maintaining the “buy” rating.
Risk warning: Demand for LCD TVs falls short of expectations; competition in the display panel industry increases risk.