Tricolor(SH:603516) Huaxin Securities·2024-03-28 16:00Investment Rating - The report does not explicitly state an investment rating for the company Core Insights - The display control equipment industry is expected to accelerate its development, with the domestic market projected to exceed 10 billion yuan by 2025, driven by policies supporting 5G and ultra-high-definition video [4] - The company is a leading provider of professional audio-visual display control equipment and solutions in China, with products widely used in various multimedia scenarios across government, defense, emergency management, energy, and transportation sectors [11][17] - The company's self-developed ASIC chips are expected to significantly reduce procurement costs and improve gross margins, with successful sample delivery anticipated by the end of 2023 [15][99] Summary by Sections Company Overview - The company specializes in audio-visual control equipment and solutions, with a product range that includes signal processing, audio conferencing, platform management, and central control systems [17] - The company has experienced revenue growth from 276 million yuan in 2018 to 483 million yuan in 2020, with a CAGR of 32.33%, but faced a decline in 2021 due to the pandemic and fluctuations in military demand [37] Financial Performance - The company's revenue for the first three quarters of 2023 reached 337 million yuan, a year-on-year increase of 24.56%, while net profit decreased by 46.28% due to declining gross margins [37] - The gross margin for the first three quarters of 2023 was 46.25%, down 3.89 percentage points year-on-year, but showed a quarterly increasing trend [37] Market Potential - The display control equipment market is expected to grow significantly, with the LED display market projected to reach 82.5 billion yuan by 2025, contributing to an overall market size exceeding 100 billion yuan for display control equipment [64] - The recovery of downstream demand in sectors such as defense and public security is anticipated to provide a favorable environment for the growth of display control equipment [68] Competitive Landscape - The company faces competition from both domestic and international players, with notable competitors including Barco and Extron, but has been gaining market share due to its technological advancements and local production capabilities [92] - The domestic market is characterized by rapid development and increasing competition, with local companies like Nova Star and Kalet also emerging as significant players [92] Strategic Initiatives - The company has implemented employee stock ownership and stock option plans to align employee interests with long-term company performance, with ambitious growth targets set for 2023 and 2024 [44][57]