On the evening of July 11, the company officially released its semi-annual performance forecast, showing strong growth momentum and profitability with excellent report cards, and is expected to achieve a net profit range of 400 million yuan to 450 million yuan in the first half of 2024, a year-on-year increase of 125.45% to 153.64%. What's more eye-catching is that the net profit after deduction is expected to reach 380 million yuan to 420 million yuan, and the year-on-year growth rate has soared to 243.47% to 279.62%, demonstrating the strong profitability of the company's main business and the good results achieved in reducing costs and increasing efficiency.
Reasons for the growth in performance
1. Focus on strategy, optimize resource allocation, strengthen internal management and other measures to build internal competitiveness, and actively respond to the complex and changeable market environment.
2. Lock in and deepen high-value projects, continue to optimize the product, market and customer structure, enhance product competitiveness and profitability, and enhance the head advantage.
3. Remarkable results have been achieved in reducing costs and increasing efficiency.
In order to interpret the company's semi-annual performance forecast to investors in detail, the company held a performance briefing in the form of online video conference at 15:30 pm on July 12, and the company's chairman Lin Min, director and general manager Wang Zhenyu, director and deputy general manager Liu Fenglei, director and deputy general manager Li Xiayun, deputy general manager and chief financial officer Zheng Ping, deputy general manager and secretary of the board of directors Han Li attended the meeting, attracting more than 400 investors to participate enthusiastically.
At the meeting, Ms. Han Li, deputy general manager and secretary of the board of directors of the company, deeply analyzed the company's semi-annual business highlights from her professional perspective and vivid language, and elaborated on the internal logic of the company's significant improvement in competitiveness and the key to the transformation of growth momentum. With the advent of the AI era, the optical field is ushering in unprecedented development opportunities, and the company is actively seizing this historical opportunity to accelerate technological innovation and industrial upgrading, and strive to occupy a more favorable position in the future market competition.
At the same time, in response to the emergency of the actual controller, the company's senior management showed a high degree of transparency and responsibility. The management not only directly responded to the concerns of investors, but also conducted a comprehensive analysis from multiple dimensions such as the shareholding of the controlling shareholder, the company's governance structure, and daily operation and management, and clearly pointed out that this emergency will not have any material impact on the company's development strategy, business operations and future prospects. This frank and firm statement has effectively enhanced investors' confidence and sense of belonging.
In the ensuing interactive Q&A session, online investors actively participated, and the company's senior management patiently listened and answered questions about customer cooperation, core product progress, technical problems overcome, vehicle and AR business layout, etc., demonstrating the professionalism of the company's team and the attitude of responsibility to investors. Here are some of the Q&A highlights:
Q: Will the major North American customers continue to upgrade in optics, and is there any possibility that the company's product categories and shares for major customers will be improved?
A: In the past, North American customers have been a very important partner of Crystal, and the following points are worthy of the attention of investors and friends in cooperation: first, coated filter products, North American major customers have completed the full upgrade of the front and rear cameras in the past, and the localization has a huge market space. Second, we have seen the sinking of the 24-year-old model of the quadruple reflective prism product, and I believe that this new product will continue to bring us better performance support in the future; Third, thin-film optical panels, the company will continue to maintain competitiveness, as an important business cornerstone in the future, and maintain stable growth by reducing costs and increasing efficiency; Fourth, the introduction of AI and the development of artificial intelligence, intelligent perception will definitely bring more demand for optics, and I believe that artificial intelligence will bring more imagination space for optical upgrades.
Q: Will there be competitive competitors in the mass production of reflective waveguide solutions?
A: First of all, the AI model has promoted the development of the AR industry, and I believe it is everyone's consensus. The world's technology giants have invested in hardware upgrades in an all-round way, and the hardware will mature rapidly, and AR glasses, as the best carrier of AI, may gradually move from a smartphone companion to an imaginary replacement for smartphones. At present, the market for smartphones is more than one billion units, and it will take time for the market demand for AR glasses to develop to the order of one billion. Under such a market size, we believe that it is likely that there will be a variety of technical routes in parallel or serially, and we are also happy to see the common growth of our friends. The core advantage of crystal has always been large-scale mass production, and we hope to break through the cost-effective and large-scale global mass production problem of reflected light waveguides. Of course, we have also carried out the layout of diffractive optical waveguides for many years, and we will continue to precipitate. In addition, in the era of AR glasses, in addition to the high-value waveguide film, a large number of sensing elements on mobile phones are also used, and in the field of metaverse optics, the translation application of mobile phone components will start smoothly. Therefore, in the era of AR glasses, crystals have achieved a good strategic position, and both reflective and diffractive waveguide crystals will maintain continuous attention.
Q: Is the growth of the company's microprism business in the second quarter due to the advance stocking of customers or the increase in its own share?
A: Last year, the mass production of microprism products began, but the pace of mass production was late, and this year's supply chain has matured and mass production is advanced, so the microprism business is reflected in the sales in the second quarter. In terms of share, the company has always been the largest supplier of microprisms, and its share will also increase this year.
Q: For microprism technology, what is the certainty of the technology for key customers in the future? Is there a possibility of upgrading?
A: The major customers have fully planned the microprism, and the products that are now mass-produced have been developed with customers a few years ago, and the follow-up technical path has also been planned. Microprism can achieve clear imaging for long-distance shooting, but there is still room for continuous optimization and iteration of the product's performance, and it can be seen that there will be no big changes in 25 years, and it will need to be followed up in the next few years. The optimization and iteration of products require very high technology development capabilities and may have great challenges, but I believe that we will be able to keep up with and undertake large-scale mass production in technology iteration in the future. We will also keep an eye on Android's periscope prism.
Q: Is it possible for the optical waveguide company to extend to solutions in addition to manufacturing and OEM?
A: Crystal in the research of optical waveguides from the beginning is not a simple manufacturer. In fact, Crystal has a full set of experience in optical design and optical design, in 2009 we entered the AR field through the OEM of optical machinery, and now we have the ability to do optical machinery, and we are more capable of doing optical waveguides. However, we believe that in order for the reflected optical waveguide to become the mainstream technology in the future, its large-scale, high-efficiency, low-cost, and high-quality mass production is a worldwide problem, which must be solved first, but at the same time as solving this, in fact, the design of materials, design, optical machinery and the entire optical system has never stopped, but the current problem of mass production must be solved first. In fact, our research on reflection and diffraction is comprehensive.
Q: What is the positioning of the company's in-vehicle business in overseas markets? How does the company see the iterative upgrade of the subsequent technical route of AR-HUD?
A: It has only been 3 years since Crystal entered the automotive business, but we have grown rapidly. The original intention of crystal to do AR-HUD is to do higher-level technology, and to reduce the dimensionality of AR-HUD on the basis of AR-HUD to make W-HUD, which is our underlying thinking. We believe that AR-HUD will become the standard equipment of automobiles, and the in-vehicle business will grow into a branch of the crystal AR pattern. Therefore, we attach great importance to the development of overseas customers. Two weeks ago, we were also invited to the global supplier conference of overseas customers, only 50 of the thousands of suppliers were invited, and only 15 of the global suppliers were mentioned, including our crystal. In just one year of contact with customers, it has been highly recognized by customers, which is due to the outstanding contribution of crystal in brand, service and technology. We have also been invited by major customers such as Germany and Japan to participate in their bidding. However, unlike consumer electronics, the automotive field does take time to transfer the project, and everyone can continue to pay attention to the progress of the in-vehicle business.
For the technical path, at present, the TFT solution is still the mainstay, but in the future, we will participate in the AR-HUD of high-end solutions such as LCOS. For the upgrade of the technical path, we have to solve several pain points of customers, such as size limitations, 3D effects, etc., which have been planned for future technology upgrades.
To sum up, we have further optimized our structure for the in-vehicle business, including our customer structure and technical structure. At present, the domestic market of vehicles is involuted, but we still have confidence in the long-term development of the vehicle business, the cost reduction of the supply chain, and the improvement of HUD penetration.
Q: What is the company's capital expenditure in the past two years? Can the R&D expense ratio of 5%-6% support the company's R&D needs?
A: The 2024 semi-annual performance forecast has disclosed that the growth rate of the company's non-net profit is much greater than the growth of net profit, mainly because the consumer electronics industry chain is recovering, and the growth trend is obvious. Last year, the company's R&D expense ratio was about 8%, which was higher than the average of previous years, mainly due to the R&D investment of the microprism project. By the first quarter of this year, the company's R&D expense ratio was about 6%, returning to a relatively normal level. This year, under the theme of reducing costs and increasing efficiency, our R&D expense rate is controlled at 5%-6%, but we still maintain saturated investment in key projects, especially in the No. 1 project. However, for the company's traditional business, through internal mining, our investment in the stock business is relatively restrained. Therefore, in general, we must scientifically control the proportion of investment in our R&D expenses and capital expenditures, but the overall budget is controlled.
Q: Is there a risk that the mass production of optical waveguides will be transferred to overseas companies?
A: As a Chinese enterprise, crystal has a very strong advantage in mass production capacity, and the bottleneck problem of reflected light waveguide is large-scale, cost-effective, low-cost mass production, of course, companies all over the world will participate in solving this problem, but we believe that our technical precipitation and strategic card position have good advantages.
A: On the issue of plastic prisms, first of all, please confirm the time point of investors, as the core supplier of micro prisms, the plan for 24 and 25 years is very clear, and the pattern and plan of the supply chain will continue for 23 years. At present, we understand that the progress of plastic prisms is still in the development stage, and there is still a lot of uncertainty about mass production, and even if things go well, it will take several years from development to mass production. The glass solution is irreplaceable in terms of material properties, which is an incomparable advantage of plastic prisms, so it has a very high degree of certainty in high-end applications. The biggest advantage of plastic prism is to reduce costs, but with the progress of the process and the improvement of efficiency, the cost of glass microprism will also decline rapidly, and we will also support large customers in the price in the future, so the attractiveness of plastic prism will be further reduced. Based on the above points, we believe that plastic prisms are still very far away.