The income and profit increased slightly in the first three quarters, and the net interest rate of Q3 increased significantly.
The company released three quarterly reports in 2021, with revenue of 5.082 billion yuan (YOY 1.84%), net profit of 799 million yuan (YOY 0.35%) and net profit of 747 million yuan (YOY-1.23%) in the first three quarters. Corresponding to 3Q21's revenue of 1.828 billion yuan per quarter (YoY-2.81% QoQ 7.47%) and net profit of 332 million yuan (YoY 8.82% QoQ 41.02%), the revenue and profit in the third quarter basically returned to the high level of last year, and the net profit reached a new high in a single quarter. In terms of profitability, 3Q21's single-quarter gross profit margin was 26.65%, slightly lower than the same period last year, and the net profit rate was 18.87%, which increased 2.49pct and 4.74pct respectively compared with the same period last year.
The market for on-board displays has broad prospects. In the era of smart cars, the company's car electronic orders are full. Markets such as central display, instrument cluster display, head-up display, electronic rearview mirror and rear seat entertainment display have been opened one after another. Omdia predicts that global shipments of on-board displays will grow from 127 million in 2020 to 277 million in 2025 (CAGR:
10.26%). Chinese mainland's automotive display suppliers accounted for about 35% of shipments in 2020, and the transfer of the automotive display industry chain to the mainland has also added impetus to the sustainable growth of the company's automotive electronics business. The company has a comprehensive coverage of automotive customers, and the project has brought full orders in the next three to five years, which has become the main source of contribution to the company's performance.
Folding screen UTG achieved small batch shipments, consumer electronics business bottomed out and rebounded. According to IDC data, 2Q21 shipped 786400 folding screen phones worldwide, an increase of 68.95% month-on-month and 82.96% year-on-year. Shipments reached a record high in a single quarter. The company's UTG business has been shipped in small quantities, with product quality and shipping scale ranking first in the industry. In terms of consumer electronics, the rapid increase in sales of Honor mobile phones is expected to fill the gap for major customers. at the same time, the company provides Quest series of VR head display module products and speeds up the research and development of high-generation VR head display module equipped with microled. The best-selling VR is expected to add momentum to the company's consumer electronics business.
Investment advice: maintain a "buy" rating
Due to the greater impact of major customer shocks and the increase in upstream material costs, we have reduced the company's 21-23 net profit to 10.65, 1439, and 1.917 billion (the previous value is 1.173, 15.24, 1.918 million), corresponding to a PE of 18.0, 13.3, and 10.0x, maintaining a "buy" rating.
Risk tips: downstream demand is not as expected, new product launches are not as expected, and competition intensifies.