Matters

Jufei Optoelectronics (300228) announced on the evening of July 12, 2017 that the net profit of 2017H1 is expected to be between 6535.58 and 83.1892 million yuan, which is + 10% to 40% compared with the same period last year. Among them, the non-recurrent profit and loss of 2017H1 is expected to be 4 million yuan, which has little impact. In the first half of 2017, the overall operation of the company was good, and the main business grew steadily. In order to continuously enhance the company's comprehensive competitiveness, we continued to strengthen R & D investment and human resources construction.

Comments:

The company's performance is in line with expectations, and net profit is expected to grow by more than 20% year-on-year. The company expects the net profit of 2017H1 to be between 6535.58 and 83.1892 million yuan, which is in line with market expectations. The company specifically mentioned that the non-recurrent profit and loss of 2017H1 is expected to be only 4 million yuan, which means that the substantial growth of the company's performance mainly depends on the growth of the main business. The company's net profit is expected to be more than + 20% year-on-year.

The continuous improvement of main business structure and the continuous expansion of overseas customers are the main reasons for the steady growth of the company's performance. The market space of large-size backlight business is 8 times larger than that of small-size backlight business, the company's large-size backlight business expanded smoothly in 2016, the share of customers such as Hisense and Skyworth continues to increase, and this year, it is estimated that the company's overseas revenue growth rate is expected to exceed that of domestic customers, contributing to performance growth. 2017H1's large-size backlit revenue is expected to continue its share of last year, which is comparable to that of small-size businesses, contributing to the main driving force of performance growth in the next 2-3 years. We are optimistic that the company's main business will continue to grow rapidly in 2017, with an estimated growth rate of more than 20%.

The company is the LED backlight faucet, the gross profit is stable, the main business returns to the rapid growth, the layout optical film, the optical communication device opens the growth space. The company is a small-size LED backlit leader in China, with a global market share of about 10%, and the gross profit margin of 2017H1 is expected to continue to stabilize. Since 2012, the company has expanded from a small size backlight to a large size backlight field of 8 times the market space. We expect that the company's 2017H1 small size and large size backlight revenue volume will continue to be the same, the large size backlight business CAGR has reached 48% in the past two years, lighting LED and small spacing LED business has grown rapidly, the company's medium-term growth space has been opened, and the main business is expected to return to rapid growth. At the same time, the company horizontally expand the product line around existing customers, layout optical communications, optical film, small spacing, flash and other related business areas, to cultivate medium-and long-term growth points.

Risk factors: increased competition in backlight business; new business development such as optical film and optical communication is not as expected.

Earnings forecasts, valuations and investment ratings. The company's backlight business is expected to return to rapid growth, and under the adjustment of the company's sales strategy, more focus on front-line key customers, and optical film, optical communications market space is broad, the company's active layout, open long-term growth space. Based on the fact that the company's customer strategy has been adjusted this year and the revenue scale is expected to decline, we slightly downgrade the company's EPS forecast for 17-18-19 to 0.15, 0.18 and 0.22 yuan, respectively (the original forecast is 0.16, 0.20). According to the 18-year 28 times PE, the target price is 5.04 yuan, downgraded to "overweight" rating.