Appo(SH:688007)2025-03-03 10:45Summary 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].