Appo(SH:688007) Guoxin Securities·2024-04-13 16:00Investment Rating - The investment rating for the company is "Buy" [3][40]. Core Viewpoints - The company is transferring its stake in Hong Kong Guangfeng to reduce uncertainties brought by GDC on its development, optimize its asset structure and cash flow, and accelerate the development of emerging businesses such as automotive [5][6]. - The automotive business has secured six key contracts, with the AITO M9 launched in December 2023 and entering mass production, achieving over 70,000 pre-orders and an expected delivery of 15,000 units in April [5][15]. - The B-end business is experiencing a strong recovery, with cinema leasing expected to grow significantly due to high box office performance during the Spring Festival, while the C-end home projection business is adjusting to industry challenges [5][10]. - The company leads globally in laser display technology, with a strong recovery in the B-end business and a well-recognized smart cockpit business, which is expected to create a secondary growth curve in the automotive sector [5][22]. - The profit forecast for 2023-2025 is adjusted to a net profit of 100 million, 170 million, and 300 million respectively, with growth rates of -15%, +66%, and +76%, corresponding to PE ratios of 88, 53, and 30 [5][22]. Summary by Sections Company Overview - The company is transferring 51% of its stake in Hong Kong Guangfeng to a wholly-owned company of its actual controller, which will no longer be included in the consolidated financial statements [12]. - The transfer aims to mitigate the negative impact of GDC's continuous losses, which amounted to -14.34 million in 2022 and -26.90 million in 2023 [6][12]. Automotive Business - The company has received contracts from six major automotive manufacturers, including BYD and international brands, and has launched its first automotive display product [15][36]. - The AITO M9 is expected to significantly contribute to revenue growth, with a monthly delivery capacity exceeding 25,000 units [15][36]. B-end and C-end Business Performance - The B-end cinema service revenue is projected to reach 370 million in 2023, a year-on-year increase of 37.2%, driven by a strong rebound in the film industry [10][19]. - The C-end home projection business is undergoing adjustments, with expectations of a gradual stabilization and potential profitability recovery [5][10]. Financial Projections - The company anticipates a net profit of 100 million, 170 million, and 300 million for 2023, 2024, and 2025, respectively, reflecting a significant growth trajectory [5][22]. - The gross profit margin is expected to improve to 36.2% in 2023, up 3.6 percentage points year-on-year [19].