Event: Hongli Zhihuifa cloth 2021 semi-annual report shows that in the first half of 2021, the company realized operating income of 2.0042071 billion yuan, an increase of 50.65% over the same period last year, and realized a net profit of 141.029 million yuan belonging to the owner of the parent company, an increase of 259.20% over the same period last year. The gross profit margin was 22.56 percent, an increase of 1.77 percentage points over the same period last year, and the net profit rate was 6.88 percent, an increase of 4.65 percentage points over the same period last year.
The LED industry is recovering steadily and the demand for packaging orders is strong. After the full adjustment of the LED industry from 2018 to 2019 and the impact of the epidemic in 2020, the market demand is gradually picking up in the second half of last year and the first half of this year. Hongli Zhihui, as a domestic leader in LED packaging, had full orders in the first half of the year, with a capacity utilization rate of 83.97% and a comprehensive product yield of 97.05%. In addition, the company's production expansion and upgrading in Guangzhou and Nanchang are progressing smoothly, and the capacity upgrade provides sufficient capacity reserves for the company's "Hongli Optoelectronics" and "Semade" brands. In the future, with the continued prosperity of the industry and the landing of the company's new production capacity, its performance scale is expected to rise to a higher level.
Mini LED is actively promoted, and the capacity layout continues to increase. According to the forward-looking Industrial Research Institute, China's MiniLED market is about 3.78 billion yuan in 2020, an increase of 140% over the same period last year. China's MiniLED industry market is expected to exceed 40 billion yuan in 2026, with a compound growth rate of 145.7% in the next six years. In the first half of the year, the first phase of the company's Mini LED project has been successfully put into production and provides mass production for domestic mainstream manufacturers. At present, the construction work of the second phase of the Mini LED project has been started in an all-round way, with a total construction area of nearly 178400 square meters and an estimated annual output value of 4 billion yuan after reaching full production. With the successful commissioning of the first phase of the Mini LED project and the start of the second phase of construction, driven by the demand of the industry, the release of new capacity will directly enhance the company's profitability and market competitiveness.
The demand for high-profit automobile lighting is full, and the performance is growing steadily. In the first half of the year, the company's auto lighting business achieved revenue of 271 million, an increase of 25.83% over the same period last year, and a gross profit margin of 24.16%, an increase of 3.75% over the same period last year. Foda signal commercial lights export business growth is obvious, business orders are full, the existing production capacity than customer order demand is in a relatively tight state, waiting for capacity expansion layout. Yishan passenger lights are actively optimizing the customer structure, the gross profit of passenger lights products is rising, the cost is falling, and the overall operation is showing a trend of improvement.
Profit forecast and investment rating: maintain buy rating. It is estimated that the company will achieve a net profit of 3.82,5.29 and 724 million yuan from 2021 to 2023, and the current market capitalization corresponding to PE is 29.03,20.95,15.32 times respectively. Maintain the company's buy rating.
Risk Tips:
1) the spread of the global epidemic exceeded expectations; 2) the uncertainty of downstream demand caused by trade frictions; 3) the acceptance of Mini LED market was not as expected; 4) the progress of production expansion and customer expansion were not as expected.
