What happened: the company released its half-yearly report for 2021. In the first half of 2021, the company achieved an operating income of 6.145 billion yuan, an increase of 48.90% over the same period last year, and a net profit of 245 million yuan belonging to shareholders of listed companies, an increase of 197.18% over the same period last year. The net profit belonging to shareholders of listed companies after deducting non-recurring profits and losses was 206 million yuan, an increase of 203.63% over the same period last year.
Comments: continue to value Tongxingda as a domestic LCD module leader and a number of global brand manufacturers reached a strategic partnership and intelligent, digital lean management strategy to pull the company's factory efficiency. With the continuous enhancement of customer stickiness, the gradual increase of market share, the continuous improvement of factory production efficiency, the significant growth of profitability, and the continuous release and optimization of production capacity and product structure, the company's profitability will increase significantly.
In a single quarter, the company realized operating income of 3.474 billion yuan in the second quarter, an increase of 41.91% over the same period last year and 30.10% month-on-month growth. The net profit attributed to shareholders of listed companies was 144 million yuan, an increase of 109.68% over the same period last year, and an increase of 43.01% over the same period last year. The main reason for the performance growth is the continuous improvement of the company's market share and the smooth progress of the company's capacity expansion strategy. In terms of customers, it has successfully expanded the world's well-known tablet computer customers; in addition, the company has further enriched the field of product applications and has become the main supplier of the leading domestic drone brands, driving the continuous growth of the performance of the optical camera group.
The expense rate has dropped significantly, and lean management has brought results. The company's cost optimization has achieved remarkable results. In the context of the substantial improvement in the company's performance, the increase in management and sales expenses is very limited. The total proportion of the company's three fees (management expenses, financial expenses and sales expenses) is 3.55%. It is 1.55 percentage points lower than last year's H1.
The company continues to promote the overall management level of the factory in accordance with the route of "factory intelligence, digitization and IT", and achieved remarkable results in the first half of 2021. Factory production efficiency and product yield are in the leading level in the industry. The increase in product efficiency and the decline in cost have brought about the enhancement of profitability, which is optimistic that the company will continue to improve its cost control ability and profitability in the future.
Product application scenarios continue to increase, and customer demand drives performance growth. In addition to being widely used in smartphones, the company's products are gradually expanding and increasing in the fields of new energy vehicles, drones and smart wear. At present, the company has established long-term and stable cooperative relations with major customers such as oppo, vivo, XIAOMI, Samsung, Yin, Lenovo, TCL, DJI, etc., with sufficient orders, sufficient production capacity and visible sustainability of future growth.
Capacity continues to be released to enhance profitability. The company continues to release production capacity to enhance the company's profitability and core competitiveness: last year, the company expanded the high-end production line of OLED smart wear and medium and large size touch display modules, further enhanced the company's advantages in scale and technological innovation, continuously enhanced the company's profitability and core competitiveness, and brought new growth points for the company's profits.
Investment suggestion: continue to be optimistic about the strategic partnership reached between Tongxingda, as the leader of domestic LCD modules, and a number of global brand manufacturers, and the pull of intelligent and digital lean management strategy on the company's factory efficiency. It is estimated that the 2021-2023 homing net profit will be RMB 651x848 million, maintaining the "buy" rating.
Risk hints: downstream customers' stock preparation is not as strong as expected, penetration to key customers is not as expected, production capacity climbing is not as expected, and cost optimization is not as expected.
