Investment highlight
For the first time, Changxin Technology (300088) rated the outperforming industry with a target price of 8.30 yuan, corresponding to 2022e21.8x Pplink E. The reasons are as follows:
Automotive electronics: continue to benefit from the upgrading trend of on-board display, and the automotive electronics plate contributes long-term growth momentum. Under the wave of cockpit intelligence, the vehicle display screen accelerates to the direction of multi-screen, large-screen and abnormal. At the same time of upgrading the vehicle display, the difficulty of the full fitting technology of the vehicle display has also been significantly improved. At present, the company has completed the industrial chain layout of "vehicle Sensor+ vehicle touch module + vehicle cover plate + vehicle touch display integrated module", and built the company's moat by virtue of technical advantages, cost advantages, production capacity advantages and customer advantages to consolidate the company's leading position in the market. We believe that the company's vehicle display business sector is expected to achieve accelerated development and contribute to long-term growth momentum in the future.
Consumer electronics: traditional terminals show stable downstream demand, while emerging terminals show a new driving force for performance growth. The company's consumer electronic touch display business products cover small sizes (VR/ wearable devices), small and medium sizes (mobile phones) and medium and large sizes (laptops and tablets). Among them, the downstream of the emerging terminal display (VR/ wearable) remains high, and we believe that the company is expected to maintain a leading position in the industry by virtue of its technological advantages and continue to grow with the head customers; the downstream demand of the traditional terminal display (mobile phones, laptops and tablets) is relatively stable, we believe that the company has reached a stable cooperative relationship with the head customers, and is expected to continue to promote display technology upgrading and expand market share in the future.
Thinning business: steadily promote UTG technology and capacity layout, folding screen to provide stable performance increment.
With the technological breakthrough and price decline of folding screen mobile phones, the market has entered the stage of scale expansion. The company already has the UTG cover plate full-link preparation process. We believe that in the future, the company is expected to obtain more end-customer product orders by virtue of technological advantages, supply chain advantages and long-term customer relations.
What is the biggest difference between us and the market? We are optimistic that the automotive electronics business segment will achieve high performance growth under the upgrade wave of on-board display; we are optimistic that the company will continue to bind consumer electronics head customers, maintain a leading position in technology and contribute to stable performance increments.
Potential catalyst: on-board display / VR industry is booming, market penetration of folding screen mobile phones is increasing, and new production capacity of on-board display and UTG is released.
Profit forecast and valuation
We estimate that the company's EPS in 2022-23 is 0.38,0.46 yuan and CAGR is 11.5%.
The current share price corresponds to 2022amp 2023e 16.8 pound 13.9x Pax E. Considering the high growth potential of Changxin Technology vehicle display business in the future, as well as the stable development of consumer electronic display business and thinning business, for the first time, we have given Changxin Technology an outperform industry rating and a price tag of 8.30 yuan, corresponding to 2022 21.8/18.0xP/E, which is still 30% higher than the current one.
Risk
Downstream shipping demand is lower than expected; folding screen mobile phone penetration speed is not as expected; raw material price fluctuation risk; new technology research and development is not expected; foreign exchange rate change risk.