He has been deeply involved in micro-nano optics for many years and has laid out four major business groups. The company has rich experience in micro-nano optical design, developed its own key manufacturing equipment, and can support the three major product business groups of public safety and new printing materials, reflective materials, and new consumer electronics materials. In the future, the company will also continue to increase R&D breakthroughs in projects such as optical waveguide lenses for AR glasses, holographic 3D optical field displays, and fingerprints under microtransparent screens.
Master the mass production technology of AR optical waveguide lenses and actively connect with automotive AR-HUD applications. As AR is the gateway to the metaverse, as technology matures, the pace of industrial application is accelerating. According to data from the China Academy of Information and Communications Technology, global AR terminal shipments were about 630,000 units in 2020, and are expected to reach 41.25 million units by 2024, with a compound annual growth rate of 184%. The company's nano lithography equipment and nano imprinting equipment have unique advantages. They have AR nano-waveguide lens mass production technology and master the stability and consistency process of waveguide lens preparation. In the automotive field, the company's AR-HUD solution has the advantages of multiple colors, far virtual visual range, large FOV, etc. Currently, it is actively cooperating and connecting with industry giants.
Benefiting from the transfer of the panel industry chain, the expansion of light guide board production helped increase performance. In 2021, mainland China accounted for 67% of the world's LCD panel production capacity. It is expected that by 2025, mainland China's share of production capacity will increase to 79%. Driven by the continuous transfer of downstream LCD production capacity to the domestic market, domestic light guide panel manufacturers will gradually replace foreign companies with the advantages of high cost efficiency and fast delivery. The company cooperated closely with mainstream panel manufacturers such as BOE, Samsung Electronics, and LG Display. In 2021, the production capacity of light guide panels was increased by 28.32 million pieces, and PMMA sheets were extruded from 6 production lines to help achieve rapid growth in performance.
Demand for reflective materials is growing steadily, and new energy license plate films are opening up space. The size of China's reflective materials market was 9.1 billion yuan in 2020, and is expected to reach 12.7 billion yuan in 2026, with CAGR exceeding 5%. Currently, most of the share of domestic microprism reflective films is occupied by foreign companies, and there is plenty of room for domestic substitution.
The company also has glass beads and microprism technology, and its technical strength is leading in China. In addition, sales of new energy vehicles continue to rise, license plate film market space is gradually opening up, and the company is expected to fully benefit.
First coverage, giving a “buy” rating: We expect the company's revenue from 2022 to 2024 to $2,570/31.53/3.735 billion, respectively, and net profit of $220/343/454 million. The company's target stock price in 2022 is 31.68 yuan/share.
Risk warning: downstream demand falls short of expectations, capacity expansion falls short of expectations, technology research and development falls short of expectations