This report is read as follows:
The company's VW business and early childhood education business are two-wheel drive, in which VW business is expected to benefit from the rise of small spacing LED; early childhood education business multi-brand omni-directional layout, industry leading position is gradually established, the first coverage to carefully increase the rating.
Main points of investment:
Cover for the first time, give cautious overweight rating. The company is the first listed company in the domestic splicing display industry, and is in a leading position in the field of ultra-high resolution digital splicing wall systems and solutions.
In recent years, the company has made great efforts to develop the business of preschool education, and the current business structure is VW + preschool education double main business pattern. It is predicted that the net profit from 2019 to 2021 will be 1.79 Maxim 178 million RMB, EPS0.20/0.22/0.24 RMB, using PE and PS valuation methods, the target price will be 4.82 yuan, and the first coverage will be given a prudent overweight rating.
Digital splicing wall system business: it is expected to benefit from the rise of small spacing LED. The main results are as follows: 1) the sales and sales area of small spacing LED are increasing, in which the proportion of sales of small spacing LED using COB technology is rising, and OCB packaging technology is gradually recognized by the market. 2) the company has deeply cultivated COB small spacing LED for many years, and has implemented many projects in public security, military, transportation, government, energy, enterprises and other fields, which is expected to benefit from the rapid development of the industry.
Preschool education business: multi-brand omni-directional layout, the number of cooperative institutions in the forefront of the industry. The company entered the preschool education industry in 2015 and successively acquired Hongying Education / Golden Cradle / Kerr Education / Dingqi early Childhood Education, achieving full coverage from county universal preschool education to high-end preschool education, and has gradually established its leading position in the industry. As of 2019H1, it provides services to about 6000 preschool education institutions, which is one of the companies with the largest number of preschool education cooperation institutions.
Catalyst: the number of cooperation institutions in the company's early childhood education business is increasing rapidly.
Risk hint: the market size of DLP is shrinking rapidly, and the promotion of the company's early childhood education business is not as expected.