This report is read as follows:
The company's earnings quality has been leading the industry for a long time and is in the rising channel, the current capacity reserves are sufficient, and the future is expected to significantly benefit from the outbreak of the Mini LED backlight market.
Main points of investment:
Cover for the first time, target price 8.4 yuan, space 42%, increase holdings. Considering the gradual landing of the new market of Mini LED, it is estimated that the EPS of the company in 2020-2022 is 0.280.40max respectively. With reference to the valuation of the comparable company, the company will be given 30 times PE in 2020 and the target price will be 8.4yuan.
The main backlight business has both product and channel advantages. The company started with small backlight LED packaging and has a deep relationship with the big company ZTE Corporation. Backlight LED packaging accounts for 70% of revenue. The comprehensive rate of return is on an upward channel, with income growth and net interest rates leading the industry. On the technical side, R & D personnel account for a high proportion, patent income-generating efficiency is industry-leading; on the product side, high quality and high customization bring high added value; on the sales side, rapid response to various types of demand increases customer stickiness.
The growth rate of traditional backlight slows and Mini LED opens new markets. From the perspective of the industry, the growth rate of the LED industry slows down, and the backlight package is affected by it. However, from the new trend, Mini LED backlight display compared with the traditional backlight and OLED has many advantages, in addition, Apple Inc leads the trend of Mini LED backlight, all kinds of Mini product technology is mature, cost reduction, so Mini LED backlight is about to break out. The potential space for Mini LED backlight and display applications is huge, and companies in the industry are generally optimistic about the prospect of Mini applications and compete for layout. As a backlit leading enterprise, the gross profit margin is stabilizing and the market share is increasing, and it is expected to be the first to benefit from the industrial upgrading brought about by Mini LED in the future.
Lighting packaging market saturation, small spacing and automotive areas bring new growth. Small spacing LED continues to grow, automotive LED domestic replacement ushered in new opportunities. Jufei Optoelectronics R & D showed LED and automotive LED technology for many years, and issued convertible bonds at the end of 2019 to expand production capacity, trying to expand the influence of backlit LED and open up the growth space of display LED and automotive LED.
Risk hint: the growth of overseas business slows due to the epidemic; the progress of Mini LED landing is lower than expected.