1-3Q21 performance meets our expectations
Liad announced the results for the first three quarters: the operating income was 5.834 billion yuan, up 30.0% over the same period last year; the net profit was 521 million yuan, up 65.1% from the same period last year, which was in the median of the previous performance forecast of 55.3% and 80.7%, which was in line with our expectations. Corresponding to the single quarter of 3Q21, Liad achieved operating income of 2.233 billion yuan, an increase of 40.7% over the same period last year, and net profit of 236 million yuan, an increase of 160.1% over the same period last year, deducting 231 million yuan of non-return net profit, an increase of 189.1% over the same period last year.
We believe that the company's 3Q21 performance has increased significantly compared with the same period last year, mainly due to: 1) according to the company announcement, the traditional LED shows that the business increased by 29.9% compared with the same period last year, and the profitability also improved significantly after the epidemic. Liad through the sinking brand Jin Lixiang to increase channel efforts, rapid penetration in the way of distribution; 2) Micro LED sales continue to grow, 3Q21 has recognized 200 million yuan in revenue, we expect to achieve the full year target.
Looking forward to 4Q21, according to the company announcement, as of October 24, on-hand orders have exceeded 10 billion yuan, an increase of 42% over the same period last year, and 14% more than before the epidemic (2019). The subsidiary virtual mobile point (NP) also has 84% year-on-year growth. We expect the company's annual revenue and performance to be highly guaranteed.
Looking to the future, with the company's Hunan plant put into use in August, the current production capacity has reached 3000KK, the company is expected to reach 6000KK full production capacity in February-March next year. In addition, the company continues to lay out in the MicroLED field, and releases consumer MicroLED through Planar. We are optimistic that MicroLED will continue to be used in the consumer field in the future, and is expected to become one of the ultimate solutions in the display field.
Development trend
Small spacing and traditional LED display enter the upstream channel of the boom. 1) We expect that with the relief of the global epidemic and the gradual resumption of offline activities, LED shows that demand will pick up, overseas demand recovery is expected to promote LED demand to continue to be strong, and the domestic sinking market is also expected to contribute to a good increase. 2) in the past few years, LED shows that the intensification of competition brought about by the slowdown in growth should not be underestimated, but we expect that some small and medium-sized display enterprises will be difficult to support during the epidemic, and the industry competition situation will gradually improve after the epidemic, the night travel economy and cultural travel can pick up, and VR assets will usher in opportunities for revaluation. 1) similar to the display screen project, we believe that night travel and cultural travel business are also expected to pick up, governments at all levels are also gradually turning positive towards investment-driven night consumption, and Liad's related business will usher in a rebound; 2) in the new infrastructure, 5G and other trends, we believe that the linkage of the company's LED display, night travel, cultural travel, VR and other business sectors is expected to burst out more value.
Profit forecast and valuation
We maintain the company 2021 EPS 22e 0.31 EPS 0.46 yuan, and the current share price corresponds to the price of the company. To maintain the outperforming industry rating, due to the downward shift of the valuation center of the industry, the target was lowered by 12% to 12.0 yuan, corresponding to 2021, 22e, 38.6, and 26.3x, which is still 33% higher than the current one.
Risk
Overseas market LED demand rebounded less than expected; Micro LED demand lower than expected.