Investment logic
Focus on the field of intelligent interactive display, and constantly expand the downstream applications. 1) the company mainly focuses on the field of business intelligent interactive display, and the downstream structure of revenue in 2021 is retail (53%), industrial control (18%), finance (17%), intelligent fitness (4.5%) and medical treatment (2%). The company's customers include American well-known POS machine and ATM machine manufacturer giant NCR and Diebold and other customers. 2) in 2021, the company acquired 3M Company's Micro Touch brand to operate its own brand, bringing business increments to the company in the fields of industrial control, medical treatment, finance and so on. 3) in 2021, the company acquired a 10% stake in Hongtong Technology, the only vehicle business subsidiary of TPK (the main supplier of Tesla, Inc. Central Control screen), and enjoyed the option to increase its stake to 49% at the same valuation within 2 years, helping the company to enter the 100 billion vehicle display market.
The global intelligent interaction market will exceed 460 billion yuan in 2025, and the CAGR will reach 10% in five years. According to our estimates, the market size of the retail display industry is expected to exceed 47 billion yuan in 2025, CAGR in five years will reach 22%, industrial display will reach 17 billion yuan, five-year CAGR will reach 9%, intelligent fitness will reach 17 billion yuan, five-year CAGR will reach 22%, medical display will reach 13 billion yuan, five-year CAGR will reach 7%, car display market will reach 370 billion yuan and five-year CAGR will reach 8%.
Thanks to the recovery of overseas demand and the expansion of downstream applications, the company's revenue has expanded rapidly; thanks to falling panel prices and the appreciation of the dollar, the company's profit margins have continued to improve. 1) benefit from the recovery of demand for overseas intelligent interaction (the company accounts for 95% of the company's overseas revenue), and the company continues to expand downstream applications (industrial control, fitness and other areas have doubled). The company's revenue is growing rapidly. In 2021 and 2022, Q1's revenue reached 1.6 billion yuan and 500 billion yuan, an increase of 33% and 73%, a record high. 2) LCD panels account for 40% of the company's raw material costs, benefiting from the decline in panel prices, the company's Q1 gross profit margin increased 3.4pct, with a net profit of 59 million yuan, an increase of 111%, a record high for a single quarter. At present, the price of large panel has fallen below the new low, helping the company's profit margin to continue to improve. 3) the sharp appreciation of Q2 US dollars will help to increase income, gross profit margin and exchange profit and loss in the short term, thus driving the further improvement of the company's Q2 profit margin.
Profit forecast and valuation
It is estimated that the net profit of the company will be 2.4,2.9 and 350 million yuan in 2022-2024, an increase of 59%, 20% and 20% respectively. Using PE valuation, the target price is 35.86 yuan per share (22*2022EPS) to give the company a buy rating.
Risks: COVID-19 's repeated epidemic situation, raw material price fluctuation risk, export policy change risk, RMB exchange rate fluctuation risk, major shareholder and director reduction risk.