Events:
On July 12, 2018, Jufei Optoelectronics issued a forecast for the first half of 2018, showing that in the first half of 2018, the company is expected to achieve total operating income of 978 million to 1.222 billion, an increase of 20% to 50% over the same period last year. It is estimated that the net profit attributed to shareholders of listed companies is 72 million to 94 million, an increase of 0% and 30% over the same period last year.
Main points of investment:
Domestic backlight LED leader, around the backlight continuous improvement and multi-dimensional expansion. The company specializes in LED device packaging business, products are widely used in mobile phones, computers, televisions and other consumer electronics, display screens, lighting, automotive electronics and other fields. After years of deep ploughing, it has grown into a leader in domestic backlit LED. In recent years, under the background of fierce competition in the backlit LED market, the company has continuously improved and promoted the technical level of its own LED backlit products through vertical improvement and horizontal expansion: following the technological footsteps of the international first-line backlit original manufacturers, in order to meet the overall demand of the industry with high screen ratio; downstream channels have been extended to vehicle and industrial control areas to enhance the added value of unit products. Extend from backlight LED packaging to backlight film materials and other related product areas, expand the coverage of the industry chain; actively carry out R & D layout in semiconductor packaging, mini LED and other advanced technology fields to ensure a leading position in the industry.
The overall screen height screen proportion trend drives the LED backlight technology to advance. Of the three iphone models launched by Apple Inc this year, the LCD version is the most favored by the outside world. Due to the new 0.3t backlight technology, the overall screen ratio of this version is expected to be similar to that of the previous generation of iphoneX using Amoled, but its cost-effective advantage is self-evident because of the low cost of the LCD module. At present, the backlight of this new iphone is mainly supplied exclusively by Niya Chemical, and it is an evolved version of the mainstream 0.4t specification, which can meet the design requirements of mobile phone brands for ultra-narrow frame. Compared with the original application of 0.4t mobile phone screen, the frame distance at the bottom can be greatly reduced, and the effect is significantly improved. Jufei Optoelectronics, as a domestic LED backlight leader, has been closely following the downstream demand. The improvement of high-end LED backlight technical specifications of panel factory is obviously a clear signal of rapid improvement of profitability for backlight enterprises with corresponding product development capabilities.
The quarterly loss in the fourth quarter of last year was due to asset impairment and goodwill processing. The company's quarterly loss in the fourth quarter of 2017 is mainly due to the treatment of the impairment of goodwill of the previously participating company live.com, bad debts of some downstream terminal customers, inventory and so on. Such large asset impairment is obviously not sustainable, and with the return to normal of consumer electronics terminal shipments after the second quarter of this year and the improvement of backlit specifications driven by the comprehensive screen tide that we mentioned earlier, the prosperity of the downstream market facing the industry this year is already different from that of last year, and we believe that this year will show a completely different performance.
Profit forecast and investment rating: cover for the first time and give a buy rating. Under the premise of a substantial increase in the overall screen penetration of LCD this year, we believe that there is a clear space for both specifications and usage of backlight particles in the application. It is expected that the company will achieve net profit of 2.23,2.90,371 million yuan respectively in 2018-2020, corresponding to 15.95,12.27,9.59 times of PE in 2018-2020, covering for the first time and giving the company a buy rating.
Risk tips: 1) LED backlight market demand is lower than expected; 2) shipments and market share of new specification backlight products companies are not as expected; 3) downstream mobile phone terminal brand customers lead to bad debt losses due to their own risks.