A high-quality and high-growth company in the automotive display industry: BOE Precision Electronics Co., Ltd. (hereinafter referred to as the “Company” or “BOE Precision”) is a subsidiary of BOE Technology Group Co., Ltd. The company focuses on the in-vehicle display business and is BOE's only in-vehicle display business platform, providing customers with in-vehicle display assemblies and smart in-vehicle display systems. As of the first half of 2021, the company's automotive display shipping area ranked second in the world. Among them, automotive displays of 8 inches and above were shipped the highest in the world.
Relying on the strong advantages of BOE Group, the automotive display business is growing rapidly: As a global IoT innovator and semiconductor display leader, BOE relies on BOE's brand and technical advantages to exert synergies, effectively reduce operating costs, quickly penetrate the automotive display market, form large-scale production advantages, and increase market competitiveness. The company currently has a number of TFT, LTPS LCD, OLED and HUD vehicle display production lines, serving more than 100 major global automobile brands. As of the first half of 2021, the company's operating revenue was HK$3.2 billion, an increase of 69% over the previous year; the net profit of the mother was HK$95.11 million, an increase of 423% over the previous year, achieving rapid growth.
The company's net profit increased by more than 350% in 2022.
Product reserves are abundant, and the future explosion of intelligent cockpits can be expected: the company's vehicle display products currently cover different fields of different sizes. In the fields of automotive instruments, central control assemblies, entertainment display systems, rearview mirrors, AR HUD, etc., it has launched various technical products such as OLED, LTPS, BD Cell, Mini-LED, 3D, large size, multi-screen, curved, full lamination, etc., and sold to mainstream car brands in China, the United States, Germany, the United Kingdom, Japan, South Korea and other countries.
In the future, the company will continue to innovate display technology, upgrade smart cockpit solutions, create a new smart mobility ecosystem, promote product innovation in the field of in-vehicle display and interaction, and provide one-stop products and services for intelligent automobiles.
Optimistic about the company's future development, the target price is HK$15. The first coverage gives a buying rating:
We forecast the company's revenue for 2021-2023 to be HK$6.4 billion, HK$8.7 billion and HK$11 billion, respectively, and net profit attributable to the parent company of HK$3.1 billion, HK$500 million and HK$670 million respectively. According to the valuation situation of similar companies, we gave the company a target price of HK$15, corresponding to 22 times PE in 2022, with room for an increase of 60.4% from the current price, and gave the company a buying rating.
Risk factors: Increased market competition, impact of fluctuations in raw materials, and production capacity construction falling short of expectations.