I. Overview of events
Recently, Huaying Science and Technology issued an announcement: Huajiacai sixth generation TFT-LCD production line project construction is smooth, the project's first 5.2-inch product has been lit successfully on March 31, 2017, follow-up products will be provided to customers for certification, waiting for customer certification after mass production.
II. Analysis and judgment
The sixth generation TFT-LCD production line has been successfully lit, and is about to enter the stage of mass production, becoming a new profit growth point. The sixth generation TFT-LCD production line project plans to invest 12 billion yuan, the size of the new glass substrate is 1500mm × 1850mm, and the design capacity is 30,000 pieces per month. It mainly produces small and medium-sized display devices, including high-end smart phones, tablet computers, vehicle display, industrial control display and so on. We believe that the sixth generation TFT-LCD production line project has excellent product performance and strong downstream market demand, which will smoothly expand customers and become a new profit growth point with the gradual climbing of production capacity.
TFT-LCD display technology is mature and has a wide range of applications, and will continue to become one of the mainstream technologies in the display field. 1. TFT-LCD display technology is in line with the future development trend of flat panel display technology, such as high quality, high telepresence, interactive multi-functional integration, energy saving, consumption reduction, health and environmental protection, and among the flat panel display technology, its technology is the most mature, the product application field is the widest, the production capacity is increased the fastest, and the market share is the highest. According to Displaysearch, the global FPD industry has an output value of US $148 billion in 2015, accounting for 98% of all display devices shipped, of which the output value of TFT-LCD panels is US $133.7 billion, accounting for 91% of the FPD industry.
2. We believe that the high-generation TFT-LCD and AMOLED production lines are being built or expanded all over the world, but their depreciation life is long, the yield is relatively low, and the output proportion of the OLED production line is small and the cost is relatively high.
With the update of technology and the progress of technology, the production cost and price of TFT-LCD are gradually decreasing, and TFT-LCD will still become one of the mainstream technologies in the display field in the future.
Third, profit forecast and investment suggestions
It is estimated that the EPS of the company from 2017 to 2019 is 0.24,0.38,0.52 yuan respectively. Taking into account the dilution of the additional issuance and the impact of the commissioning of the sixth generation TFT-LCD production line project, the company can be given 50-55 times PE in 2017, with a reasonable valuation of 12.0-13.2 yuan in the next 6 months, maintaining the company's "cautious recommendation" rating.
Fourth, risk tips:
1, the production capacity is not as expected; 2, the progress of the project is not as expected; 3, it shows that the market competition is intensified.
