Performance review
2021 and 1Q22 performance are in line with market expectations
Liad announced 2021 results: the company achieved operating income of 8.852 billion yuan, an increase of 33.4% over the same period last year; the net profit of returning to the mother was 611 million yuan, reversing losses; and deducting the net profit of 555 million yuan, which was in the previous forecast range, in line with market expectations. Corresponding to 4Q21, Liad's quarterly income was 3.018 billion yuan, an increase of 41% over the same period last year, a record high for a single quarter, with a net profit of 90 million yuan, reversing losses over the same period last year.
From a business point of view: intelligent display income in 2021 was 6.898 billion yuan, an increase of 33.0% over the same period last year, with a gross profit margin of 30.2%; night travel + cultural income was 1.628 billion yuan, an increase of 39.1% over the same period last year, and gross profit margin was 21.6%. The gross profit margin of VR was 315 million yuan, an increase of 17.0% over the same period last year, and a gross profit margin of 74.5%; other income was 12 million yuan, an increase of 58.1% over the same period last year, and the gross profit margin was 25%.
In addition, the company also announced 1Q22 results: 1Q22 operating income was 1.762 billion yuan, an increase of 18.2% over the same period last year; net profit from home was 115 million yuan, an increase of 10.8% over the same period last year; and net profit from non-return was 103 million yuan, an increase of 7.6% over the same period last year, in line with market expectations.
Trend of development
Focus on smart display business, cut into the sinking market to maintain growth momentum. According to the company's quarterly report, 1Q22 Liad's smart display business accounts for 88% of revenue, a five-year high, and continues to focus on the display business. Considering the improvement of the performance-to-price ratio of products in the downstream market of LED display, Liad entered the domestic mid-range and sinking market on a large scale with "Jin Lixiang" brand, and started the construction of Changsha Intelligent display Industrial Park. According to the company's annual report, Changsha Park has basically reached monthly production capacity of 6000KK by the end of 2021. In addition, the company also has an eye-catching performance in Micro LED. In 2021, the monthly production capacity of 800KK was expanded and reached production, with an order of 320 million yuan.
VR business continues to grow high, virtual reality content production core hardware. According to the company announcement, the virtual mobile point (NP) business of subsidiaries will grow by 72% in 2021 compared with the same period last year. Virtual Motion Point has self-developed OptiTrack dynamic capture products, which is one of the top solution providers in the motion capture industry. We believe that under the upsurge of meta-universe and ARVR content development, virtual moving point is expected to continuously promote the construction of virtual scenes through self-research technology, which will help the company's VR business achieve high growth.
Profit forecast and valuation
We maintain 2022 EPS 23e 13.6/10.9xP/E 0.42 13.6/10.9xP/E, and the current share price corresponds to 2022 Universe 23e. To maintain the outperforming industry rating, considering the downward shift of the valuation center of the industry, we lowered the company's target price by 33% to 8.0 yuan, corresponding to 2022max 23e 19.3max 15.5x Pmax E, which still has 42% room for increase compared with the current one.
Risk.
Demand for LED displays fell short of expectations; new businesses such as Micro LED and VR fell short of expectations.