Chengdu Xgimi Technology Co.Ltd(688696) (688696)
We expect that the sales volume of China’s home projector industry will reach nearly 8 million units in 2024: Home projectors can occupy a long time in home entertainment scenes, and continue to upgrade in brightness, resolution, intelligence and diversity of entertainment functions, and the product cost performance continues to improve. We believe that the popularity of home projectors is expected to further improve. Assuming that the penetration rate of household projectors will increase to 5% in 2024, we estimate that the market scale can reach nearly 8 million.
Chinese manufacturers represented by Jimi promote the rapid expansion of the home projector market through product innovation: Japanese enterprises such as Epson, power and Sony, relying on their technical advantages in the 3lcd field, are mainly used in the commercial field and have a high market share in the early development of China’s projector industry. Jimi, nuts and Xiaomi have continuously carried out product innovation for the consumer pain points in the home scene, become a new generation force in the projector industry, and drive the rapid development of the home projector market in China. Jimi has certain technological advantages in the field of high-end products. New models are usually listed ahead of competitors, and the use experience is in a leading position in the industry. Since 2018, the market share has steadily ranked first in the industry.
The product power is leading, the channel layout is perfect, and Jimi’s business in China is steadily improving: at present, there is still much room for improvement in the experience of home projector products, and consumers look forward to the launch of higher quality home projector products. At present, household projector products of more than 5000 yuan are relatively scarce. Jimi is the leading industry to launch products with higher brightness and resolution. For example, in 2019, Jimi took the lead in launching 4K home projector in the industry to meet the needs of medium and high-end consumers. Jimi’s offline channel system is perfect, and China’s offline revenue accounts for 37% (2019). With the launch of high unit price products, the offline revenue is expected to grow rapidly. With the expansion of the company’s equipment sales scale, the Internet value-added service business is expected to develop rapidly. We expect the company’s Internet value-added service contribution performance CAGR to reach 59% from 2020 to 24.
The overseas market is expected to copy China’s development path. We expect that the sales volume of the overseas home projector industry will reach nearly 90 million units in 2024: the Chinese projector brand will bring home projectors with intelligent functions into the overseas market, which is expected to accelerate the penetration of home projectors in the overseas market. Referring to the development of China’s household projector industry, we estimate that the market scale of overseas household projectors is expected to reach about 9 million units in 2024, and the CAGR will be 89% from 2020 to 2024.
The software and hardware conditions for Jimi to go to sea are gradually mature, and the overseas business ushers in a golden period of development: in 2020, Jimi will realize an overseas revenue of 410 million yuan, and we estimate that the number of equipment sold is about 150000. Jimi has relatively mature conditions for going to sea in terms of software, hardware and content. The price increase rate of the company’s products in overseas channels has nearly doubled, and the dealers have strong motivation to promote products, which is conducive to the rapid expansion of products in overseas markets. Chinese brands have the competitive advantage of high quality and medium price. Compared with overseas companies, Chinese products iterate faster and cost-effective. Most of the products launched overseas by Jimi before 2020 are old Chinese products. In 2021, the Chinese product line will be gradually introduced into the overseas market, and the overseas profit margin is expected to continue to rise.
We expect that there is still room to improve the profitability of Jimi: mainly because 1) the household projector is in the process of upgrading from 1080p to 4K, the brightness of the product also has great room to improve, and the continuous upgrading of the product structure is expected to improve the gross profit margin; 2) The proportion of Internet value-added service revenue will continue to increase; 3) The gross profit margin of overseas business is high, and the increase in the proportion of overseas business will increase the overall gross profit margin of the company.
Investment suggestion: Jimi is the leader in China’s projector industry. The company’s products and channels are continuously optimized and its profitability is improved. At the same time, the company has made greater efforts to expand overseas markets and is expected to achieve rapid growth in the dividend period of the industry. We estimate that Chengdu Xgimi Technology Co.Ltd(688696) EPS from 2021 to 23 will be 8.71/12.99/20.33 yuan. The target price of Chengdu Xgimi Technology Co.Ltd(688696) is 813.20 yuan / share, corresponding to 40xpe in 2023, maintaining the investment rating of buy-a.
Risk warning: technology R & D risk, increased market competition risk, some core parts rely on outsourcing risk, and the calculation assumption is less than the expected risk
