On the evening of April 26th, Guangfeng Technology (688007. SH) disclosed its financial report for the first quarter of 2024. According to the financial report, the company’s revenue in the first quarter of this year was 445 million yuan, with a net profit attributable to the parent company of 44.5433 million yuan, a significant year-on-year increase of 226.21%. Deducting non attributable net profit, the company achieved a turnaround from losses to profits, with an overall gross profit margin of 33.24%. Multiple key financial indicators have performed steadily.
“The basic business has driven the company’s profit indicators to continue to improve; the growth business has burst into new vitality, and the revenue from the car business has achieved a breakthrough from 0 to 1, becoming a key growth pole for the company’s future.” The first quarter report stated.
Among the main businesses, the cinema business and professional display business, which serve as the company’s foundation, have developed steadily. The overall revenue of the cinema business has increased by 21% year-on-year, while the automotive optics business has entered a period of revenue contribution.
Not only did Guangfeng Technology provide impressive financial data in the first quarter, but at the recent 2024 Beijing International Auto Show (hereinafter referred to as the “Beijing Auto Show”), as an important supplier of the automotive industry chain, it also showcased the world’s first ALL-in-ONE all-around laser headlights and other products, demonstrating its determination to drive the automotive optics business onto the fast lane of development.
Improvement of business quality in the first quarter
Guangfeng Technology is a leading enterprise in semiconductor laser light sources. According to the first quarter report, Guangfeng Technology’s operating income was 445 million yuan, with a net profit attributable to the parent company of 44.5433 million yuan. The company’s multiple businesses are steadily developing.
Among them, the cinema business has benefited from the good development trend of the film market. According to data from the National Film Administration, this year’s Spring Festival box office reached 8.016 billion yuan, setting a new record for films of the same period. With the Chinese New Year box office reaching a new high and the continuous release of demand driven by high-quality films, the company’s cinema business revenue has improved. In the first quarter, the overall revenue of Guangfeng Technology’s cinema business was 153 million yuan, a year-on-year increase of 21%.
Guangfeng Technology’s forward-looking layout in the automotive optics business has entered a period of revenue contribution. In December 2023, Guangfeng Technology welcomed the landing of its first designated model, the Wenjie M9, and entered the intensive mass production and delivery phase in March of this year. With the smooth landing and delivery of the M9, the company’s car grade projection screen has been fully validated in the market. According to the delivery rhythm of automotive companies, in the first quarter of this year, Guangfeng Technology has achieved a revenue of 48.0268 million yuan from its in car optical business.
Some trading financial assets of Guangfeng Technology generate investment income and fair value gains and losses, which also have a positive impact on the company’s net profit attributable to shareholders. This is due to Guangfeng Technology’s investment layout in the upstream industry chain. On March 25th of this year, Hubei Gebijia Optoelectronic Technology Co., Ltd., a joint venture of the company, was successfully listed on the Beijing Stock Exchange. The company’s related investments are expected to promote overall synergy in the industrial chain, accelerate market response speed, and achieve efficient resource integration in the future.
“During the reporting period, the company’s cinema and in car optics businesses developed steadily and improved, while optimizing and controlling expenses. Expenses decreased by 20.6% year-on-year, with significant results in cost reduction and efficiency improvement. Since the beginning of 2024, the cinema and professional display businesses have driven the company’s profit indicators to continue to improve, and the growth disk business has burst into new vitality. The in car business revenue has achieved a breakthrough from 0 to 1, becoming a key growth pole for the future.”.
In terms of follow-up development, the film industry predicts that the film market is expected to continue to steadily recover this year, and the overall box office is expected to achieve growth. According to the first quarter report, in terms of cinema business, the company plans to increase the research and promotion of VLED LED Cinema projection solutions, expand the development space of cinema business, and enhance the sustainability and resilience of the business.
In addition, the company actively promotes technology going global. In April this year, Guangfeng Technology participated in the International Film Industry Conference in the United States, allowing visitors to experience the ultimate viewing experience brought by ALPD laser projection technology firsthand. At the beginning of this year, the company also made its debut at the European International Audiovisual Technology and System Integration Exhibition with multiple specialized display application achievements and solutions, and made its first public appearance of the new engineering projection product S Pro, promoting the professional display business to go global.
Car optical business is improving
Revenue increased from 0 to 1, and in car optics was the most impressive quarterly report. Li Yi, founder, chairman, and CEO of Guangfeng Technology, also emphasized in his annual report letter to shareholders his emphasis and optimism on the automotive optics business.
“The ‘basic disk’ represented by cinemas and professional displays and the ‘growth disk’ of the ‘in car business’ have a strong complementarity of’ offensive and defensive integration ‘, making the structure of Guangfeng’s business very stable.” Li Yi said that the breakthrough in the in car optics business is profound, and the company needs to seize the opportunity to transform from a small track to a large market and continue to expand its strategic advantages and achievements in the field of in car optics. Taking advantage of the historic opportunity of domestic new energy vehicles opening up new tracks and rapidly rising, actively seizing blue ocean markets such as in car optics and smart cabins, and running the “Shenzhen acceleration” in the field of in car optics.
Guangfeng Technology has made positive progress in the field of in car optics, becoming the world’s first and also the world’s first enterprise to implement in car immersive display and in car projection virtual real fusion products, providing the industry’s first car grade projection giant screen for the Wenjie M9. According to data disclosed by Wenjie, in early April, the cumulative sales volume of the Wenjie M9 exceeded 70000 units in the three months since its launch, and the monthly delivery capacity of the model has climbed to over 25000 units. Most consumers choose the high-end version equipped with a laser projector, and Guangfeng Technology has also created an efficient and agile supply chain system for high-quality delivery. This model is expected to drive Guangfeng Technology’s in car optical business to generate continuous revenue.
In addition to the Wenjie M9, Guangfeng Technology has also received development appointment notices from manufacturers such as BYD, BAIC New Energy, and Huayu Vision. Li Yi’s annual report revealed that the other five designated models that have not yet been released will have a positive impact on the company’s future performance.
Recently, Guangfeng Technology has exhibited multiple new technologies in automotive optics. At the Beijing Auto Show, Guangfeng Technology released the world’s first ALL-in-ONE all-purpose laser headlights, which were unveiled in multiple designated models such as SMART, BAIC New Energy, and Hongqi Automobile, showcasing outdoor viewing, road display, and other functions.
It is understood that the current technology of automotive headlight light sources is in a period of transformation, and intelligent functions such as ADB, pixelated projection, and human-vehicle interaction have higher requirements for light sources. The laser light source technology with small size, high brightness, brightness attenuation, and low energy consumption has brought integration and intelligence to the car lights, gradually gaining market favor. For example, the brightness of the ALPD laser light source at the peak of the light is 10 times that of conventional car grade LEDs. When using the same DLP digital light processing chip, the system’s output luminous flux increases by more than 2 times.
In this situation, Guangfeng Technology continues to launch innovative products. The ALL-in-ONE all-around laser headlight launched at the Beijing Auto Show is the world’s first laser headlight that integrates multiple functions such as high beam ADB headlights, variable temperature headlights (compatible with fog light mode), high beam lighting, ground information display, car cinema, etc. into a small volume headlight module, changing the previous form of laser headlights, innovating to achieve functions that could only be achieved with multiple modules, and significantly reducing system power consumption and cost.
In terms of key technology research and development, Guangfeng Technology has previously launched its first automotive grade projection giant screen, which is mounted on the Wenjie M9. This giant screen breaks the dilemma of conventional screens and optical mechanical solutions not being able to meet the requirements of car regulations. It has been developed through original research and development in screen material selection, structural design, and other aspects, achieving a breakthrough from 0 to 1. Guangfeng Technology has conducted tens of thousands of experiments and hundreds of material screenings for this purpose, finally achieving functions such as no screen shake during high-speed driving, adjustable lifting and lowering at -40 ℃~85 ℃ without deformation, and no indentation deformation during winding for tens of thousands of times.
On this basis, Guangfeng Technology revealed that the company is still continuously developing new generation car projection systems 2.0 and 3.0. It is understood that the 2.0 solution will achieve doubling of brightness and resolution, as well as upgrading the screen, while the 3.0 solution will integrate AI technology to significantly improve interactive properties, making projection more than just display.
According to the China Association of Automobile Manufacturers, as of March this year, the domestic retail penetration rate of new energy vehicles reached 41.6%, a year-on-year increase of 7.6 percentage points. With the continuous improvement of automotive electrification and intelligence, Guangfeng Technology’s in car optical business is facing a broad market prospect.