Incident: The company released its 2023 annual report and financial report for the first quarter of 2024. In 2023, the company achieved revenue of 4.06 billion yuan, an increase of 43.29% over the previous year; realized net profit of 316 million yuan, an increase of 55.53% over the previous year; and realized deducted non-net profit of 276 million yuan, an increase of 70.66% over the previous year. In 2024, Q1 achieved revenue of 864 million yuan, up 21.87% year on year and 41.15% month on month; realized net profit of 71 million yuan, down 10.28% year on year and 26.31% month on month; realized deducted non-net profit of 50 million yuan, down 29.06% year on year and 39.50% month on month.
Domestic and foreign markets are flying on both sides, and Q1's profitability increased month-on-month: in 2023, thanks to the company's unique “brand machine” market positioning, the company's domestic display business achieved revenue of 1,430 billion yuan, +38.14% year over year; with the rapid recovery of overseas markets, the company's comprehensive overseas revenue was 2,576 billion yuan, +46.32% year over year. In 2023, the company's gross margin was 29.57%, -1.80pcts year on year; net margin was 7.72%, +0.44pcts year on year. The company's gross margin in Q1 '24 was 30.40%, -3.91 pcts year on year, +4.96 pcts month on month; net margin was 7.84%, -3.28 pcts year on year, +1.50 pcts month on month. In terms of expenses, the company's sales, management, R&D and financial expenses rates in 2023 were 13.26%/4.43%/4.17%/-0.11%, respectively, with year-on-year changes of -2.12/-0.23/-0.29/-0.02pcts, respectively.
Domestic orders showed a high year-on-year increase, and the new energy storage business contributed to revenue growth: In 2023, the company achieved about 5.3 billion yuan in contracts, an increase of about 51% over the previous year. By market, the international market maintained steady growth, with orders of about 2.8 billion yuan, an increase of about 26% over the previous year; domestic orders entered a strong phase, with orders of about 2.5 billion yuan, an increase of about 93% over the previous year. In terms of product lines, the company's five major product lines (advertising product line, stage product line, commercial display product line, visual product line, iCON product line) all achieved significant increases in order volume. In particular, the visual product line increased by more than 100% year over year; 14 of these product platforms doubled their annual growth, contributing a total of 3.5 billion dollars in sales. Furthermore, through investment and establishment of a new company, the company's energy storage equipment products achieved revenue of 3.7947 million yuan in 2023. At the same time, through research and development of LED display photovoltaic energy storage solutions, the company is expected to fill the “LED display+energy storage” market gap and open up new space for growth.
Demand for LED displays is picking up, and the micro LED commercial process is accelerating: According to Jibang Consulting's research, the global LED display market size bottomed out and rebounded. In 2023, the global LED display market reached 7.564 billion US dollars, with sales volume +8% compared to the same period last year. At the same time, new technologies such as IMD integrated packaging technology, Mini LED, and Micro LED continue to emerge in the LED display industry, which has promoted technological progress in the industry and ushered in a new stage of LED display development. In 2023, upstream industry and screen manufacturers once again increased their investment in R&D and production capacity for Micro LED. Soaring production led to rapid cost and price adjustments, increased terminal market acceptance, and accelerated large-scale commercialization. In 2021-2023, the company invested a total of about 400 million yuan in R&D expenses, and continued to increase R&D investment in core technologies such as micro LED, virtual shooting, LED all-in-one computers, small outdoor spacing, LED fire retardant, and home theaters; in 2023, the company launched a total of 55 new products, which strongly supported performance growth; the company's sales of products based on Micro LED technology increased by more than 200% year on year, and shipments reached a new high.
Maintaining the “increase in holdings” rating: The company's management formulated a three-year (2023-2025) strategic development plan outline based on comprehensive research and judgment on market trends and its own development; it has already signed about 5.3 billion yuan in 2023, and strives to sign 8 billion yuan in 2024 and 10 billion yuan in 2025. The company continues to maintain an optimistic outlook on the future development of the LED display industry and is starting a strategic layout in the energy storage business. The company's internal and external business complement each other, the management foundation is solid, and all operating indicators are showing a positive trend. We estimate that the company's net profit for 2024-2026 will be 434 million yuan, 602 million yuan, and 804 million yuan respectively; EPS will be 1.20 yuan, 1.66 yuan, 2.21 yuan, and PE will be 13X, 9X, and 7X respectively.
Risk warning: Technological innovation risk, business globalization risk, exchange rate fluctuation risk, new energy storage business expansion falls short of expectations.