Tricolor(603516) 民生证券·2024-09-09 03:17Investment Rating - The report initiates coverage on Chunzhong Technology with a "Recommend" rating [1][50] Core Views - Chunzhong Technology is a leading provider of professional audio-visual solutions, with products widely used in command centers, smart meeting rooms, and commercial applications [1][5] - The company's performance has been under pressure due to delayed orders in specific industries, but a recovery is expected in 2024 as downstream demand rebounds [1][12] - The company has made breakthroughs in self-developed chips, which are expected to enhance gross margins and strengthen core competitiveness [1][3] - Collaboration with Company N in testing and inspection platforms is expected to contribute to incremental performance starting this year [1][4] Business Overview - Chunzhong Technology is a leading domestic display control enterprise, with its downstream primarily focused on specific industries such as military, government, and emergency management [5][8] - The company's revenue mainly comes from display control products, and a performance inflection point has emerged in 2023 [10][12] - The company has expanded its product lines to include professional audio-visual, virtual reality, artificial intelligence, and professional chips [10][11] Industry and Market Analysis - The domestic display control equipment industry is expected to exceed 10 billion yuan by 2025, driven by the continuous advancement of 5G construction and ultra-high-definition video [1][26] - The military and public security sectors are expected to see increased demand for display control systems, supported by government budgets and policy initiatives [21][22] - The ultra-high-definition video industry is projected to grow significantly, with the market size expected to reach 5 trillion yuan by 2025 [26][27] Product and Technology Development - The company has launched three self-developed chips: Coollights, Zeus, and Thor, which are expected to enhance product competitiveness and reduce costs [3][39] - The company has entered the testing and inspection platform business through collaboration with Company N, focusing on liquid cooling testing platforms and AI-based inspection platforms [41][44] - The company's virtual reality products, particularly in the AR field, have shown significant growth potential, contributing to revenue in 2024 [33][34] Financial Performance and Projections - The company's revenue in 2023 was 499 million yuan, with a year-on-year growth of 31%, and net profit attributable to the parent company was 17.5 million yuan [12][52] - Revenue is expected to grow to 634.4 million yuan in 2024, 810.6 million yuan in 2025, and 1.0348 billion yuan in 2026, with corresponding net profits of 91 million yuan, 134 million yuan, and 200 million yuan [46][52] - The company's gross margin is expected to improve from 51% in 2024 to 54% in 2026, driven by the adoption of self-developed chips and improved product mix [46][52] Valuation and Investment Recommendation - The company's PE ratio is projected to be 58x in 2024, 39x in 2025, and 26x in 2026, with a PEG ratio of 0.1x in 2024, indicating undervaluation compared to peers [48][50] - The report recommends the stock based on the company's strong growth potential, technological advancements, and strategic collaborations [50]