1. Industry demand is strong, competition pattern is optimized, the company's LED business sustained and healthy development Wanrun Technology focuses on the field of LED, the industrial chain gradually extends from LED light source devices to LED lighting products. At present, the company has become a provider of high-end LED light source devices and LED lighting products, and is one of the domestic leading companies in the field of high-end LED products. Under the background of the continuous strong demand of the global LED industry and the continuous transfer of the production capacity of the whole industry chain to the mainland, the domestic competitive environment and structure of China's LED industry are continuously optimized, which is mainly reflected in the continuous improvement of the industry concentration of LED chips and LED packaging in China. The company has been engaged in LED lighting and packaging for many years. As a leading domestic scale and technology LED packaging and lighting enterprise, we judge that the optimization of the competitive pattern of the LED industry in the next 2-3 years will enhance the company's overall competitiveness and profitability.
two。 Collaborative and diversified development, continuous mergers and acquisitions to create a closed loop of the Internet advertising industry in order to achieve diversified development of business, the company has extended to the field of advertising media associated with LED lighting products in recent years. In 2015, the company began to enter the Internet marketing industry through mergers and acquisitions and strategically create the second main business. Since 2015, the company has completed the acquisition of Rishang Optoelectronics (advertising logo lighting), hundreds of millions of wireless (mobile marketing), Dingsheng Yixuan (real estate home marketing), Vientiane Xintiao (mobile precision marketing), and Hangzhou Lixin Media (TV advertising) in 2018. After continuous investment and M & An integration, the company has accumulated rich experience and customers in the field of advertising marketing as well as the layout of a complete industrial chain, and is expected to continue to develop rapidly in the future.
3. Equity incentive scheme shows future prospects and confidence
On February 5, 2018, the company disclosed the 2018 Equity incentive Plan (draft), which uses restricted shares to encourage the core of the company. The total number of restricted shares granted is 33.1 million shares. The grant price of restricted shares granted for the first time is 3.24 yuan. The equity incentive scheme provides a good incentive mechanism for the core backbone of the company, and plays an important role in the future development of the company and the promotion of its core competitiveness. at the same time, the incentive scheme puts forward business objectives for the future performance of Sun Optoelectronics, Hengrun Optoelectronics and hundreds of millions of Wireless, demonstrating the company's prospects and confidence in the future.
Our view is different from that of the market: (1) the market thinks that the profitability of the company's LED business is unstable, and we believe that with the continuous upward trend of LED prosperity and concentration, the profitability of the company's LED business will continue to improve. (2) the market believes that the company has acquired media marketing-related assets many times and is difficult to integrate, and we believe that the company has accumulated rich experience in the marketing industry since 2015. and the company in mobile precision marketing, real estate industry marketing, TV marketing and other aspects to improve the layout, create an industrial chain closed loop, outstanding integration effect, will be an important growth point of the company's future performance.
Future catalyst of stock price: we believe that the main catalysts of the company's future stock price are: (1) the sustained growth of LED performance; (2) the healthy development of media marketing business and the high performance growth brought to the company by the table.
Investment suggestion: we expect the company's net profit from 2017 to 2019 to be RMB 2.15, 302, respectively, RMB 387 million and EPS, 0.27, 0.38, respectively, with a target price of 7.6 yuan (corresponding to PE20 2018), first coverage and buy rating.
Risk tips: Internet marketing business performance is not up to expectations; acquisition goodwill impairment risk.
