The company's main products are backlight display modules and liquid crystal display modules, downstream customers are mainly liquid crystal display manufacturers, the products are finally mainly used in the field of vehicles, the global market share of vehicle backlight modules is about 11%.
The company's products mainly include backlight display module and liquid crystal display module, in which backlight display module products account for more than 75% of revenue. Benefiting from the recovery of the automobile industry, the company's revenue in the first three quarters of 2022 was 1.024 billion yuan, an increase of 16.85% over the same period last year, while its net profit was 77 million yuan, an increase of 88.43% over the same period last year. The global market share of the company's car backlight module products in the first half of 2022 is about 11%. With excellent products and quality services, the company has established long-term cooperative relations with world-renowned LCD manufacturers such as JDI, Sharp, Tianma, Huaxing Optoelectronics, LGD, Youda, Qunchuang and so on.
With the promotion of automobile intelligence and electrification, HUD, LCD dashboard and LCD central control continue to expand, driving the volume of on-board display panels around the world. The company won 22 orders for new models in the first half of 2022. The backlight display module is the upstream of the liquid crystal display module, accounting for 32% of the cost structure of the panel subdivision type.
The global vehicle backlight display module is expected to be 245 million pieces in 2023, an increase of 7% over the same period last year. The company has the advantage of the whole industry chain and responds to customer demand quickly. The company has a first-mover advantage in the field of vehicle backlight modules, and its product gross profit margin is ahead of its peers, with a Weishi electronic gross profit margin of 16.21% in 2021.
Mini LED drives the LED industry into the third round of business cycle, automotive Mini LED backlight module products volume and price rise, the company is expected to seize the industry dividend. Mini LED backlight technology is better than LED backlight display screen in brightness, contrast and color restoration. Vehicle Mini LED backlight display has become the first choice for car manufacturers. The requirements of high definition and low power consumption increase the penetration of Mini LED, and the current LED industry has entered the third round of business cycle. Automotive backlight display has become an important application of Mini LED. We judge that the automotive Mini LED backlight module industry will be the first to break out in 2023. Shipments of automotive Mini LED backlit displays are expected to grow by more than 100 per cent from 2023 to 2024, according to TrendForce.
The value of Mini LED backlight module has increased significantly, and the industry has experienced a high boom in both volume and price. MiniLED backlight makes up for the lack of LCD brightness and enhances the VR immersion experience. MiniLED backlight + FastLCD is expected to become the standard of VR optical solution Pancake, and the company has obtained the certification of two LCD manufacturers. In 2021, global VR head shipments will be 11.1 million units, an increase of 65.7% over the same period last year; it is estimated that global VR head shipments will reach 21.75 million units in 2025. China's AR/VR expenditure will grow at a compound annual growth rate of more than 40% from 2021 to 2026, which may directly benefit the company.
In addition to the active layout of endogenous growth business, the company also shows confidence in the development of stock buybacks through outbound investment in a new display industry. Following the layout of Mini-Led, intelligent surface and other new display business, the company continues to invest in the field of high-end vehicle display in the field of aerial display. According to the company's announcement, as of December 30, 2022, the company has accumulated 0.94% of the total share capital, which will be used for equity incentives or employee stock ownership plans to demonstrate development confidence.
Investment suggestion: the company is the leading enterprise of vehicle backlight module, benefiting from the dual drive of Mini LED and VR, entering the fast lane of development. It is estimated that the 2022-2024 net profit of the company will be 106 million yuan, 178 million yuan and 280 million yuan respectively, corresponding to the existing share price PE of 30Xpai18X and 11X respectively, with reference to the company's growth and peer valuation, we give the company a price-to-earnings ratio of 25 times in 2023, corresponding to the target price of 21.00 yuan, covering for the first time and giving a "recommended" rating.
Risk tips: (1) downstream automobile and other industries boom downward; (2) the introduction of Mini LED products is not as expected; (3) industry competition intensifies.