Event: on the evening of September 18, Shen Tianma An issued an announcement that the company's actual controller, China Aviation Technology International Holdings Co., Ltd., increased its stake in the company by 1750000 shares on September 18, 2018.
Major shareholders increase their holdings to demonstrate their confidence in the development of the company. On September 18, 2018, the actual controller of the company, AVIC International, increased its stake in the company by 1750000 shares through the trading system of the Shenzhen Stock Exchange. after the increase, AVIC's shareholding increased from 8.17% to 8.26%. At the same time, AVIC International has promised to increase its holdings by no less than 50 million yuan and no more than 100 million yuan within six months from the date of disclosure of the announcement. The increase of AVIC International's holdings reflects its firm confidence in the company's sustained and stable development in the future and its recognition of the company's value.
Innovation and upgrade of small and medium-sized panels. In recent years, the upgrading of small and medium-sized panel products has been accelerated.
The overall screen penetration is rising rapidly, and it is now standard for smartphones. AMOLED is also gradually used on smart phones, and there is a broad market space in the future.
Domestic small and medium-sized panel leader, obvious competitive advantage. The main advantages of Shen Tianma A lie in the continuous technological upgrading, reasonable industrial layout and the support of downstream local industries. The company's R & D cost accounts for more than 7% all the year round, and is in the industry leading level in touch technology, comprehensive screen technology, AMOLED and other aspects; the company's layout a-si, LTPS, AMOLED, the current a-si transformation professional shows that LTPS maintains the world's leading shipments, AMOLED production line is progressing smoothly while continuing to increase investment in AMOLED, and the industrial layout is reasonable; in addition, the company's downstream industry (smartphone) is also supported by a strong local industry.
The AMOLED production line is progressing smoothly. At present, the company's G5.5 & G6 AMOLED production lines have produced goods, and the flexible AMOLED will be put into mass production by the end of the year. The release of production capacity of AMOLED production line will help the company to grow rapidly in the future.
The increase of major shareholders will help the return of the company's value and maintain the buy rating. We estimate that the company's EPS will be 0.91,1.25 and 1.55 yuan from 2018 to 2020, and the current stock price will be 12.8x, 9.3x and 7.5x PE in the next three years, respectively. At the same time, considering the company's current price-to-book ratio of 0.91, we think the company's stock price is undervalued. The increase of major shareholders reflects their confidence in the development of the company and a high degree of recognition of the value of the company, which is conducive to the return of the value of the company and maintain the "buy" rating.
Risk tips: AMOLED demand is lower than expected; the company's AMOLED capacity release is lower than expected; panel prices continue to fall risk and so on.