Event

On September 3, the company disclosed the second phase of the equity incentive plan, which intends to grant 12.503 million stock options to 248 incentive targets, accounting for 3.58% of the total share capital at the time of the announcement, and the exercise price is 10.00 yuan per share.

Business analysis

The company aims for a compound revenue growth rate of 52.46% in the next three years, and the exercise price is higher than the current price to show confidence in development.

The assessment goal of this incentive plan is: based on the 2021 operating income, the revenue growth rate in 2020-2023 will reach 46.55%, 132.04% and 254.16%, respectively, corresponding to the revenue growth rate of 46.55%, 58.34%, 52.63% and 52.43%, respectively, in 2021-2023, and only when the performance is not lower than the target income will the company be qualified to exercise the right. It can be seen that the company has a greater grasp of the future performance. In addition, the exercise price determined by the company is higher than the current price, which demonstrates the company's confidence in development.

COB technology first-mover advantage is highlighted, focusing on three tracks to help the company enter a new journey of development. The company has been engaged in small spacing COB technology for many years, and its core competitive advantage is obvious. at present, the yield of the process is as high as 98.49%. On the basis of COB technology, the company has developed pixel engine technology to achieve low cost of high-definition display, and the Mini/Micro LED display business based on COB technology has maintained rapid growth. in the first half of 2021, the company's Mini/Micro LED ultra-high-definition display business based on COB technology achieved a total income of 196 million yuan. It increased by 147% over the same period last year, of which some domestic income increased by 177% over the same period last year. With the help of COB technology, the company achieved revenue of 567 million yuan in the first half of 2021, an increase of 44.51% over the same period last year, and a net profit of 20.39 million yuan, an increase of 259% over the same period last year. It is predicted that the company's COB technology + pixel engine display technology will continue to optimize and upgrade in the future, and achieve better development in the three tracks. The first is to continue to strengthen and expand the dedicated display market such as command and control centers; the second track is the commercial display represented by the smart conference. In the first half of 2021, the revenue of the company's LEDHUB intelligent conference system increased by 236% compared with the same period last year. The third track is the high-end civilian market, such as home theater, large living room TV screen, etc., with the continuous improvement of technology and further decline in costs, the company is expected to achieve a breakthrough in the high-end civilian market in the future.

Investment suggestion

It is estimated that from 2021 to 2023, the company's revenue will reach 14.2,20.9 and 3.12 billion yuan respectively, and the net profit will be 0.85,1.86 and 311 million yuan respectively, corresponding to an EPS of 0.24 EPS 0.53 pound 0.89 yuan respectively, maintaining the "buy" rating.

Risk hint

Mini/Micro LED fell short of expectations; repeated global outbreaks led to lower-than-expected demand; and rising prices of raw materials.