Event: the company released its third-quarter performance report in 2021, with revenue of 923 million yuan in the first three quarters of 2021, an increase of 40.59% over the same period last year, and a net profit of 45 million yuan, an increase of 7137.19% over the same period last year.
In the single quarter of Q3 in 2021, the company achieved revenue of 356 million yuan, an increase of 34.76% over the same period last year, and a net profit of 25 million yuan, a substantial turnround over the same period last year, an increase of 56.25% over the same period last year.
Q3 revenue reached an all-time high in a single quarter, and asset profitability improved significantly: the company's net profit increased by 7137.19% in the first three quarters compared with the same period last year. Q3 net profit in 2021 increased by 56.25% Q3 gross profit margin by 25.30%, improved by 1.86pct, and ROE reached 7.31% in the first three quarters, increasing 7.24pct compared with the same period last year. In the domestic market, domestic revenue reached 388 million yuan in the first three quarters of 2021, an increase of 88 percent over the same period last year. The company's Micro LED ultra-high definition display business based on COB technology achieved a total revenue of 297 million yuan, an increase of 95% over the same period last year, and continued to increase its market share in the field of Micro LED dedicated and commercial display applications. In terms of overseas markets, in the first three quarters of 2021, the company's overseas business revenue reached 535 million yuan, an increase of 19% over the same period last year, of which overseas LED display business revenue was 270 million yuan, an increase of 46% over the same period last year, and overseas LED lighting business revenue was 265 million yuan. The company's demand for export orders continues to increase, and overseas business continues to pick up.
Small spacing shows accelerated penetration to small spacing, the LED display industry is expected to grow rapidly: from the demand side, thanks to the rapid development of 5G+8K, breakthroughs in new technologies of Mini and Micro LED, and effective control of the domestic epidemic, the demand of the LED industry continues to pick up and the prosperity remains at a high level. According to TrendForce, the global LED display market demand in 2020 is 13.59% lower than in 2019, and the market space is expected to grow by 12% in 2021. In addition, with the increasing demand for clarity in the dedicated, commercial and household display markets, micro-spacing (below P1.0mm) display will become a new favorite in the market. At present, ultra-small spacing display screens under P1.0 are rapidly infiltrating and are widely used in security monitoring, corporate meetings and educational space. According to TrendForce data, shipments of small spacing and micro-spacing products increased by nearly 10% in 2020 compared with the same period last year, and the market size of small-spacing display is expected to grow by nearly 59% in 2021. The market size of small-spacing display in 2020 is US $2.738 billion (YoY+5.0%). With the continuous expansion of the application field of LED small-spacing display and the increase of shipments of ultra-small-pitch display screen ≤ P1.0 year by year, CAGR is 27% in 2020-2025, and the industry is expected to maintain a high growth momentum in the next few years.
Release of Micro LED private giant screen cinema products, a milestone to enter the home consumption blue ocean market:
Recently, the company released the "Micro LED Private Giant screen Cinema" 4K flagship version of the 138in series, starting at 499999 yuan. The product uses Micro LED based on COB technology to splice ultra-high-definition ink screen, with a contrast of 1, 000 and 1, a color gamut of 125%, a visual angle of 170 °, and a HDR display effect, making the movie more immersive. The company locates its products in the super-large household consumption market and has a differentiated competitive advantage. At present, the less than 100inch display is still dominated by LCD and OLED, so it is difficult to provide immersive viewing experience; although laser technology is suitable for the market above 100inch, the picture color of laser technology is greatly affected by ambient light, and the display effect needs to be improved.
Micro LED not only has excellent display effect, but also has small restrictions on product size, and it is easy to install at home. The company's new Micro LED home theater products focus on oversized tracks, with significant advantages over their peers in price, and are expected to accelerate penetration in high-end residential buildings, private cinemas, high-end clubs, e-sports venues and other fields in the future.
Maintain the "buy" rating: we are optimistic that the company will continue to take the lead in COB technology. With the acceleration of ultra-small pitch market penetration in the future, COB packaging under P1.0 is expected to become the mainstream development direction in the future, and the company has obvious first-mover advantages. At the same time, the LED display industry has entered a period of repair affected by the epidemic, market demand is expected to recover as a whole, and the company's business is expected to benefit from the overall recovery of the industry. It is estimated that the return net profit of the company from 2021 to 2023 is RMB 351 million, EPS is RMB 0.51 million, PE is RMB 49x, PE is 22x, and PE is 11x respectively.
Risk tips: market demand is not as expected, small spacing LED screen penetration is not as expected, production capacity climbing is not as expected, and the company's product promotion progress is not as expected.