Appo(SH:688007) GOLDEN SUN SECURITIES·2024-05-19 03:02Investment Rating - The report initiates coverage with an "Accumulate" rating for the company [7][8]. Core Views - The company is a leading provider of laser display hardware and solutions, having pioneered the ALPD® laser technology, which addresses the "speckle" issue in laser displays and leverages domestic rare earth material supply chain advantages [5][6]. - The film market is recovering, and the company's cinema business is expected to improve significantly due to the installation of approximately 30,000 ALPD laser light source systems [6]. - The automotive optical sector is expanding, with the company’s ALPD technology being the only one certified for automotive applications, indicating strong growth potential in this area [20][29]. Summary by Sections 1. Global Leading Laser Display Hardware and Solutions Provider - The company has successfully developed and industrialized the ALPD® laser display technology, with ongoing advancements in its sixth generation [5][24]. - The company has established deep partnerships with major firms such as China Film Group, BARCO, and SONY, enhancing its market position [5]. - The company’s core technology team is young and stable, with a strong focus on innovation and a significant number of patents filed [38][46]. 2. Automotive Industry Outlook - The automotive optical market is seen as a key area for differentiation, with HUD (Head-Up Display) adoption rates increasing rapidly [20][30]. - The company has begun to see revenue contributions from its automotive optical products, with the Q1 2024 automotive business entering a harvest phase [20][29]. - The company has secured six high-quality automotive contracts, indicating a strong market presence and growth potential [20]. 3. Solid Foundation in Traditional Business - The cinema business is expected to rebound due to the recovery of the film market, with significant increases in box office revenue and audience numbers [6]. - The company holds the leading market share in various segments, including engineering and commercial education products, with a comprehensive range of offerings [6]. - The home market is also expanding, with a significant shift towards laser projection products, projected to see a 35% year-on-year increase in shipments in 2024 [6]. 4. Profit Forecast and Valuation - Revenue projections for 2024-2026 are estimated at 2.93 billion, 3.41 billion, and 3.87 billion yuan, reflecting year-on-year growth rates of 32%, 16%, and 14% respectively [7]. - Net profit forecasts for the same period are 210 million, 290 million, and 410 million yuan, with growth rates of 107%, 37%, and 39% respectively [7]. - The company is compared to peers in the laser and automotive sectors, with an average PE ratio of 48 times, while the company is projected to have a PE of 39, 29, and 21 times for the next three years [7].