The readings of this report are as follows:
The company's 2021 performance forecast is in line with expectations, leading in the layout of Mini LED, and is expected to expand rapidly; deterministic production expansion ensures the steady growth of traditional business.
Main points of investment:
Maintain the "overweight" rating. Considering the short-term restrictions on the company's export business caused by high shipping costs, we downgrade the company's EPS forecast for 2021 to 0.41 yuan (- 0.03) yuan and maintain the forecast for 2022-2023 EPS of 0.72,0.97 yuan. With reference to the average valuation of the major domestic LED packaging enterprises in 2022, we maintain the company's 2022 PE valuation of 30 times, corresponding to the stock price of 21.6 yuan.
The recovery of the industry led to a significant increase in profits. The company issued a performance forecast for 2021, which is expected to achieve a net profit of 253-293 million yuan, an increase of 172.7% and 215.8% over the same period last year. It is estimated that the net profit of deducting non-return will be 200-240 million yuan, an increase of 267.8% and 341.4% over the same period last year. On the one hand, thanks to the recovery of the industry, the company's sales scale has increased significantly compared with the same period last year. At the same time, the company's transfer of 80 per cent of its subsidiary Kingsai contributed part of its non-recurring earnings. We believe that the industry is currently in the stage of bottom recovery, the company's loss-making subsidiary Gold Technology has completed the equity transfer, and the operation of Yishan headlights is also being significantly improved, superimposing the company's deterministic production expansion. The company's traditional business is expected to maintain a steady growth trend.
The layout of Mini LED backlight package is leading, and VR is an important growth point in the short term. The company has a leading layout in MiniLED packaging, and its yield and production capacity are at the leading level in the industry. At present, the company's VR products have been supplied to international well-known VR enterprises, is expected to take the lead in volume. In addition, the company has also cooperated to develop a number of TV, desktop display, notebook mini LED backlight modules. Mini LED may become an important growth point for the company's future performance.
Catalyst. The demand for Mini LED and automotive lighting is growing rapidly.
Risk tips. The epidemic repeatedly affected demand, and the company's capacity construction fell short of expectations.
