1H22 performance is in line with our expectations
Liad announced 1H22 results: operating income of 37.02 yuan, an increase of 3% over the same period last year; net profit of 268 million yuan, down 6% from the same period last year, which was higher than the median of the previous performance forecast, in line with our expectations. For 2Q22 in a single quarter, Liad reached 1.94 billion yuan, down 8% from the same period last year, and the net profit returned to its mother was 153 million yuan, down 16% from the same period last year. We believe that the main reason for the pressure on the company's 1H22 performance is: 1) the night travel business of literature and travel is seriously affected by the epidemic, which is 49.72% lower than that of the same period last year. 2) the epidemic in East China has affected a wide range of domestic epidemic in April-May, resulting in pressure on the growth of the company's smart display business.
1H22 sub-business point of view: 1) Intelligent display: realized income of 3.176 billion yuan, year-on-year increase of 16%, gross profit margin of 28.8%, year-on-year increase of 0.15ppt. 2) Culture and Tourism Night Travel: realized revenue of 361 million yuan, down 49.72%, gross profit margin of 36.4%, year-on-year increase of 9.26ppt; 3) Virtual display: 159 million yuan, year-on-year increase of 13.6%, gross profit margin of 84.6%, year-on-year growth of 25.88ppt.
Trend of development
The launch of "black diamond" products promotes Micro LED sales, and smart display continues to open up new markets. 1) recently, Liad released a series of "black diamond" products, using Micro LED full flip chip and packaging technology, which has high stability, reliability and significantly improved brightness and contrast, and has a high performance-to-price ratio, which is expected to promote the continuous opening of Micro LED market space. 2) Liad began to plan the Asian, African and Latin American market at the end of last year, and has set up a team of more than 100 people for product development and marketing. At present, leasing and outdoor advertising products have been ordered and mass produced in June. We are optimistic about the continued development of overseas markets in the future to promote the continued growth of the company's smart display business revenue and profits.
The yield of mass transfer has improved, and new technologies such as quantum dot Micro LED have continued to break through. Together with the participating company Saphlux, Liad has completed the development and testing of the Micro LED display screen and has achieved the industry's first display screen using quantum dots Micro LED chip, which we believe is expected to accelerate the commercialization of Micro LED. In addition, Lijing Micro, a joint venture company, has adopted a large amount of transfer technology. at present, through continuous technology upgrading, the good rate of mass transfer has increased from 98.9% to 99.995%, and the prices of links such as superimposed chips have continued to fall. we expect the company to promote the continuous growth of related business revenue.
Profit forecast and valuation
Considering that the night travel of Wenlu is obviously affected by the epidemic, we reduced the price by 1% to 0.40 EPS 0.51 yuan, and the current stock price corresponds to 2022max 23e 16.2max 12.6x Pmax E. We maintain the outperform industry rating, considering that the stock price has basically reflected the impact of the 1H22 epidemic, and we maintain the target price of 8.0 yuan, corresponding to 2022max 23e 20.2max 15.7x Pmax E, which still has 24% room to rise compared with the current situation.
Risk
LED showed that downstream demand recovered less than expected; the fluctuation of the epidemic affected the company's progress in developing new business.