Appotronics (688007) released its 2022 third quarter report on October 28. In the first three quarters of 2022, Guangfeng Technology achieved operating income of 1.876 billion yuan, a year-on-year increase of 12.96%, and deducted non-net profit of 54.1763 million yuan. At the same time, the net profit in the third quarter of 2022 was 45.3897 million yuan, a month-on-month increase of 61.5%, and the operating conditions were stable.
In the third quarter, the three major businesses of in-vehicle optics, C-end self-owned brands, and home core devices made significant progress, providing growth impetus for the development of Appotronics. The financial report shows that the automotive optics business has made breakthroughs in the reporting period, and Appotronics received the “Development Designated Notice” issued by BYD Auto; the C-end self-owned brand has grown rapidly, and the new product S5 laser projection has performed well, and it will be easy to launch once it is launched. It has become an explosive product in the mainstream price segment; the overall operating income of home core devices in the first three quarters increased by more than 140% compared with the same period last year.
Regarding the factors affecting the profit in the third quarter, Guangfeng Technology pointed out in the financial report that due to the impact of the epidemic, the company’s business education business revenue fell by 16.8% year-on-year; at the same time, the company continued to increase C-end market promotion in order to strengthen the rapid expansion of its own brands. Investment, the market input cost increased by 12.565 million yuan; on the other hand, in order to motivate the core personnel to launch the equity incentive plan, the current share payment cost nearly 26 million yuan. After excluding the impact of share-based payment expenses, the net profit in the third quarter was 73.84 million yuan, and the deducted non-net profit was 60.622 million yuan.
Breakthrough in vehicle optics
In mid-September, Guangfeng Technology announced that it has received a development designation notice from BYD Auto, and the company will become BYD Auto’s automotive optical components supplier. This appointment marks a breakthrough in the market expansion of Appotronics’ in-vehicle business, and is expected to have a positive impact on the company’s operating performance during the project life cycle.
CITIC Securities pointed out that at present, Guangfeng Technology has established cooperative relations with Huawei and BYD, which fully reflects the feasibility of laser display technology in the field of vehicle optics and the company’s technical heritage. With this endorsement, Appotronics will continue to expand its business in the front-loading and after-loading markets, strengthen cooperation with OEMs and Tier 1 companies, and the automotive optics customer circle is expected to continue to expand.
In terms of product form, there are many application scenarios of laser display in the car, including roof canopy, transparent window display, entertainment large screen, ARHUD, smart laser headlights, etc. With the improvement of the penetration of the smart cockpit, it is expected that the product form of the roof canopy and entertainment large-screen projection is expected to be the first to land, contributing to the main increase in the medium term.
CITIC Securities said that Appotronics’ automotive optical business will focus on customer expansion during the year, and will start to contribute performance from next year. It is expected to show exponential growth in the future, opening the company’s second growth curve.
In terms of C-end self-owned brands, during the reporting period, Fengmi Technology, a subsidiary of Guangfeng Technology, released the first new S5 laser smart projector with a price of less than 3,000 yuan. CITIC Securities believes that the launch of the new S5 product proves that Appotronics’ original laser display technology solution is not only suitable for the high-end market, but also has a strong cost-effectiveness and excellent display effect in the mainstream price range of 3K due to its outstanding cost advantage and excellent display effect. Competitiveness.
The financial report shows that in the first three quarters of 2022, Guangfeng Technology continued to develop the C-end market, and its subsidiary Fengmi Technology’s own brand business accounted for more than 50% of Fengmi Technology’s total revenue; in the third quarter, its own brand business accounted for Fengmi’s total revenue. The total technology revenue exceeds 70%.
Recently, Fengmi Technology has reached a strategic cooperation with JD. In-depth cooperation, and jointly achieve a strategic sales target of 2 billion yuan.
Continuous verification of core device strategy
Since the company’s founder and chairman Li Yi concurrently served as CEO at the beginning of this year, the strategy of “core technology + core devices + application scenarios” has been repeatedly emphasized. In addition to the innovative business represented by in-vehicle optics, and the C-end own brand, the company has grown its business. Several important data indicators continued to improve.
In the first three quarters of 2022, Appotronics’ home core device business achieved a year-on-year increase of more than 140% in revenue; even in the traditional off-season in the third quarter, the home core device business still achieved a year-on-year increase of more than 90% in operating income. It is expected that in the fourth quarter, with the arrival of large-scale shopping festivals such as “Double Eleven” and “Black Friday”, customers’ new products at home and abroad will be launched one after another, which is expected to drive the rapid growth of the business performance of household core devices.
In terms of overseas markets, Appotronics actively explores the overseas professional display market. The overall performance of overseas ODM and brand sales in the first three quarters of 2022 will grow by nearly 160%. Talking about future development, Li Yi previously said in the media exchange meeting: “It will better implement the strategy, and at the same time do a good job in team management and youth building.”