Event: according to the company's semi-annual report for 2021, 2021H1 achieved revenue of 2.004 billion yuan, an increase of 50.65% over the same period last year; net profit of 141 million yuan, an increase of 259.20%; and net profit of 128 million yuan, an increase of 576.96% over the same period last year. 2021Q2's revenue was 1.148 billion yuan, an increase of 53.15% over the same period last year, an increase of 34.11% over the same period last year; the net profit returned to the mother was 80 million yuan, an increase of 179.41% over the same period last year, an increase of 31.15% over the same period last year; and the non-return net profit was 73 million yuan, an increase of 386.64% over the same period last year and 32.73% over the previous year.

Performance increased significantly, profitability improved significantly: the company's 2021H1 revenue and homing net profit increased significantly compared with the same period last year, mainly due to the pick-up demand in the LED market, the strong demand for LED semiconductor packaging orders, and the rapid release of packaging capacity. From the perspective of business, LED package income is 1.684 billion yuan, year-on-year + 59.06%, gross profit 21.17%, year-on-year + 0.63pct, capacity utilization rate is 83.97%, comprehensive product yield is 97.05%. Automotive lighting business income 271 million yuan, year-on-year + 25.83%, gross profit margin 24.16%, year-on-year + 3.75pct, Foda signal commercial vehicle lamp domestic and foreign market two-line layout continues to deepen, Yishan passenger lamp customer structure optimization, product gross margin increased, costs decreased, the overall operation continued to improve.

In addition, Zhongying Gongyuan and Mingxincheng actively participate in the bidding activities of domestic engineering lighting projects, and the business trend of brightening engineering, cultural tourism lighting and landscape lighting is improving.

Traditional packaging business volume and price rise, Mini led capacity advantages are obvious: traditional packaging, benefiting from the continuous warming of the LED industry, as well as Guangzhou line production capacity expansion, the company's traditional white light packaging business ushered in a simultaneous rise in volume and price, which is expected to increase the company's market share in the field of LED packaging. In terms of automotive lighting, Foda signal commercial lights export business growth rate is obvious, orders are full, production capacity is relatively tight; Yishan passenger lights actively optimize customer structure, passenger lamp products gross profit increases, costs fall, and the introduction of Beijing Automotive and other new customers, new projects, the company has become the first mainstream automotive LED package full-line mass production of the national brand. In terms of Mini LED, the company actively promotes the construction of the Mini LED project. The new Mini LED shows that the first phase of the project has been put into production, and the second phase has started construction, with an estimated annual output value of 4 billion yuan after reaching full production. The company leads the industry in terms of Mini LED packaging capacity, and the release of new capacity will drive the rapid improvement of the company's profitability.

The trend of recovery in lighting demand has intensified, and the volume of the Mini LED market is just around the corner: in terms of LED lighting, the demand for LED lighting has recovered rapidly since the second half of 2010. the total export volume of 2021H1 China's lighting products is 29.081 billion US dollars, which is + 49.85% compared with the same period last year, of which LED lighting products export volume is 20.988 billion US dollars, year-on-year + 50.83%. The total export volume of lighting products and the export volume of LED lighting products both set a historical record for the first half of the lighting industry. The overall exit of lighting continues to warm up. In terms of Mini LED, according to LEDinside, the Mini LED market will develop rapidly in the next few years. The global Mini LED output value will reach 1 billion US dollars in 2023, and the Micro LED market output value will reach 2.891 billion US dollars in 2025. Mini LED not only inherits the characteristics of traditional seamless splicing with small spacing, wide color gamut, low power consumption and long life, but also has the advantages of high protection, large visual angle, high PPI, high brightness and contrast. In addition, panel factories and machine factories speed up the introduction of MiniLED products. BOE has mass produced P0.9 glass-based MiniLED direct display products, TCL released X128K MiniLED leading Yao screen, and Apple Inc is about to release a new MacBook Pro with MiniLED display screen. With the cost reduction effect appearing, MiniLED has ushered in the first year of commercial use, and related manufacturers have entered the stage of mass production and preparation. The outbreak of downstream applications is expected to lead mid-stream MiniLED packaging manufacturers to accelerate capacity expansion. The company is expected to usher in a period of explosive performance.

Maintain the "buy" rating: optimistic about the leading layout of the company in Mini LED packaging, with the volume of downstream Mini LED applications, it is expected to significantly improve the company's performance. It is estimated that the company's 2021-2023 return net profit is 372 million yuan, 537 million yuan, 607 million yuan, EPS is 0.53,0.76 yuan, 0.86 yuan, corresponding to PE is 30X, 21X, 18X respectively.

Risk Tip: LED package price reduction is higher than expected, technology progress is not as expected, Mini LED demand is not as expected, capacity release is not as expected.