Summary of Appotronics Corporation Ltd. (688007.SS) Conference Call Company Overview - **Company**: Appotronics Corporation Ltd. - **Ticker**: 688007.SS - **Industry**: Laser display technology Key Financial Results - **2024 Preliminary Results**: - Total revenue: Rmb2,418 million, a growth of 9% year-over-year (yoy) [1] - Net profit: Rmb29 million, a decline of 72% yoy, slightly below the previous guidance of Rmb25 million to Rmb35 million [1] Earnings Forecast Adjustments - **Earnings Forecasts for 2025E-2026E**: Adjusted down by 4% to reflect the latest preliminary results [2] - **12-Month Target Price**: Remains at Rmb11, based on a 23X exit multiple applied to 2026E EPS, discounted back to 2025E using a 9.5% cost of equity [2][9] - **Investment Rating**: Maintained as "Sell" due to concerns over weakening fundamentals and high valuation [2][7] Financial Metrics - **Revenue Growth**: - 2024E: Rmb2,419 million (0% change from previous forecast) - 2025E: Rmb2,882 million (down 0.8% from previous forecast) - 2026E: Rmb3,417 million (down 1.2% from previous forecast) [4] - **Net Income**: - 2024E: Rmb29 million (down 8.5% from previous forecast) - 2025E: Rmb168 million (down 4.3% from previous forecast) - 2026E: Rmb229 million (down 3.8% from previous forecast) [4] - **Earnings Per Share (EPS)**: - 2024E: Rmb0.06 - 2025E: Rmb0.36 - 2026E: Rmb0.49 [4] Market Position and Strategy - **Business Segments**: - Approximately equal exposure to B2B (cinema projectors, optical engines) and B2C (home projectors, laser TVs) markets [7] - Expansion into more B2B applications and gaining market share in B2C through a joint venture with Xiaomi [7] - **R&D Pipeline**: Strong focus on laser display technology to maintain leadership in B2B applications and increase B2C market share [7] Risks and Challenges - **Key Risks**: - Weak consumer demand and intense competition - Elevated valuation compared to historical averages - Uncertainty regarding potential revenue and profit contributions from the auto display business [7][9] Price Target and Valuation - **Current Price**: Rmb19.28 - **Downside Potential**: 42.9% to the target price of Rmb11 [8] - **Market Capitalization**: Rmb8.7 billion / $1.2 billion [8] Conclusion - Appotronics is facing significant challenges with declining net profits and a cautious outlook on consumer demand and competition. The investment thesis remains bearish, with a "Sell" rating due to the mismatch between weakening fundamentals and high market valuation. The upcoming quarterly earnings will be critical in assessing the company's trajectory moving forward [2][7].