Events:
On the evening of August 21, the company released its 2020 mid-year report, and its performance was in line with expectations. In the first half of 2020, the company achieved revenue of 1 billion yuan, down 12.75% from the same period last year, and realized net profit of 143 million yuan, down 2.41% from the same period last year. Net profit after deducting non-profit was 126 million yuan, down 1.76% from the same period last year. Of this total, Q2 realized revenue of 561 million yuan, down 11.16% from the same period last year, and realized net profit of 88 million yuan, down 2.19% from the same period last year. Net profit after deducting non-profit was 79 million yuan, down 3.41% from the same period last year. Considering the impact of the epidemic, the overall performance of the report is in line with expectations.
The epidemic dragged down the company's revenue, and the auto lighting business was affected by the epidemic in the first half of the year. Downstream terminal demand declined, and total revenue fell 12.75% year-on-year, an improvement compared with the first quarter. Among them, the company's main backlight business dropped 8.87% compared with the same period last year, the comprehensive yield of products reached 98.90%, a slight increase compared with the previous year; traditional lighting business dropped 10.59%; automotive lighting business revenue went against the trend and rapid growth, has successfully entered Chery, BYD, Jianghuai and other supply chain systems, the automotive industry is approaching a turning point, new energy vehicle sales are growing rapidly, automotive lighting business will bring new increments to the company.
Gross profit margin hit a six-year high, H2 performance is expected to be repaired
The company's profitability rose against the trend during the reporting period. The gross profit margin in the first half of the year reached a six-year high of 28.99%, while the net profit after deducting non-profit was 126 million yuan, down only 1.76% from the same period last year. Quarter by quarter, Q2 single-quarter gross profit of 30.13%, a seven-year high, after deducting non-net profit of 79 million yuan, down 3.41% from the same period last year.
Operating costs decreased by 15.16% compared with the same period last year, mainly due to a significant decline in taxes, sales expenses and administrative expenses. The company's capacity utilization rate was only 71.75% in the first half of the year. As the impact of the epidemic weakened in the second half of the year, downstream demand picked up and capacity utilization gradually picked up, the company's business lines are expected to usher in performance repair.
Terminal products are about to appear, MiniLED backlight is coming from the market, Apple Inc iMac and iPad with MiniLED backlight are about to appear, the first product may be listed in the fourth quarter of this year; other manufacturers also accelerate the launch of MiniLED backlight products, MiniLED is expected to enter large-scale commercial use. We estimate that the global output value of Mini LED applications in 2021 and 2022 will reach 659.75 billion yuan respectively, of which the output value of the packaging industry will reach 13.2 billion yuan in two years. As a small-size backlight faucet, the company has an early layout in Mini LED and is ready for mass production, which is expected to fully benefit from the outbreak of Mini LED backlight applications.
Investment suggestion
We estimate that from 2020 to 2022, the company's operating income will be 2.2793 million yuan, the net profit will be 2.97 million yuan, and the net profit will be 456 million yuan, 0.36 yuan and 21.6518.20 times for EPS 0.23 and PE respectively. Maintain the company's "buy" rating.