Event

Event 1: on August 11, the company announced a pre-plan for a non-public offering of A-shares (the second revised version), with a total amount of no more than 800 million yuan to be raised for construction projects such as automotive electronic display intelligent equipment, large-size TV module intelligent equipment, semiconductor closed testing intelligent equipment and so on. Event 2: the company released its semi-annual report on August 13, showing a net profit of 37.69 million in the first half of 2020, down 12.28% from the same period last year, and operating income of 352 million, an increase of 2.29% over the same period last year.

Brief comment

Revenue is basically in line with expectations, and Q2 profits have declined under the influence of tax rates. In terms of ① revenue, the company's Q1/Q2 revenue is 164,000,000, Q1 is down 10.12% from the same period last year, and Q2 is up 16.28% from the same period last year. Q2 revenue growth is basically in line with expectations. From the profit side of ②, the net profit of Q1/Q2 is 0.220.16 million yuan respectively, and Q1 is 35.69% higher than the same period last year. Q2 fell 41.16% from the same period last year. The main reason is that the national high-tech enterprise qualification review is in progress, and the company temporarily calculates and pays enterprise income tax at the 25% tax rate. Once the future company passes the review, it will pay income tax at a tax rate of 15%. ② according to the company's disclosure, in 2019, the company and BOE Group signed tax orders of 0.46, 0.14, 0.70, 2006m respectively, with a cumulative order of 335 million yuan, including fitting / binding / cleaning and other equipment. In March 2020, the company once again announced that it had signed a 88.7 million tax-free order with Chengdu BOE B7, a total of 2 solid-state optical adhesive machines and polarizer production lines, with full and steady growth of on-hand orders.

Based on the delivery rhythm of the company's products, it is expected to increase the growth rate of revenue / profit in the second half of the year and maintain stable growth throughout the year; with the general trend of OLED investment, the company's products gradually break through ① compared with traditional LCD display technology, OLED has many advantages, such as high brightness, high contrast, high color gamut, low energy consumption, flexibility and so on. With the continuous maturity of OLED technology and the improvement of yield and production capacity, it is judged that its permeability in the end products will continue to increase, and the corresponding demand for OLED module equipment will also increase rapidly. ② according to our statistics, the current domestic OLED production lines under construction / planning include BOE Mianyang, Chengdu, Chongqing, Fuqing Line, Tianma Wuhan Line, Huaxing Optoelectronics Wuhan Line, Shenzhen Line, Hehui Shanghai Line, Weixin Nuoguan Line, Hefei Line, Huike Chief Sha Line, Ruoyu Shenzhen Line, etc. A total of 12 production lines, single-line production capacity is mostly 48K/ month or 30K/ month. According to the calculation of the equipment value of 24 module lines and single module line corresponding to 48K production line, the number of domestic module lines is expected to reach about 120 million in the next 3 years, and the value of corresponding module equipment is about 250-30 billion. Considering the above panel production line production plan, it is judged that the domestic module equipment market space in 2020-2022 is about 50-6 billion, 70-8 billion and 11 billion respectively, while the domestic module equipment market space in 2019 is only about 30-4 billion, which shows the rapid growth of the market; while the ③ market is growing, the localization rate of module equipment is also increasing rapidly. As the domestic leader of module segment fitting equipment, in 2019, based on the advantages of the original small and medium-sized equipment module market, the company carried out the research and development of large-size module bonding equipment and the expansion of the whole line of TV module, and the market share is still further improved.

It is proposed to raise no more than 800 million yuan, plus automotive electronics, large-size modules, semiconductor closed test project ① company's previous announcement, intends to issue no more than 43.23 million A-shares to no more than 35 specific targets, including the company's real controller, Mr. Nie Quan, and the total amount of funds raised shall not exceed 800 million yuan. Used for automobile electronic display intelligent equipment construction project, large size TV module intelligent equipment construction project, semiconductor closed test intelligent equipment construction project, etc. Among the investment projects raised by ②, "Automotive Electronic display Intelligent equipment Construction Project" and "large-size TV Module Intelligent equipment Construction Project" are investment projects in the field of intelligent display. The former is applied to small and medium-sized automotive electronic intelligent display, and the latter is used in large-size flat panel intelligent display. The products are mainly hot pressing, bonding, AOI testing, cleaning and other equipment. The product category is basically the same as the company's existing main product categories. By August 2020, the company has accumulated large-size TV and automotive electronic flat panel display orders of 110 million yuan; ③ through the "semiconductor closed test intelligent equipment construction project", the company will make full use of the existing experience, technology and talent accumulated in intelligent equipment, actively expand to the semiconductor closed test equipment field, and further expand the application field of intelligent equipment. At present, in the field of semiconductor equipment, the company has completed the development of semiconductor flip equipment and signed orders for related equipment, achieving a breakthrough in the sales of this kind of equipment, and is developing semiconductor COW packaging equipment, which has laid a good technical foundation for the company to enter the semiconductor field. General Manager Nie, the controller of ④, also plans to participate, with a total subscription of no less than 15 million yuan and no more than 30 million yuan, demonstrating his confidence in the company's future development direction.

Investment suggestion: with the gradual improvement of the yield of OLED panel enterprises and the increase in the demand brought about by the improvement of the permeability of downstream OLED products, China has gradually entered the construction process of the module line in the rear section of OLED, driving the demand for module equipment in the latter section. It is estimated that the domestic module equipment market space from 2019 to 2022 is about 30-4 billion, 50-6 billion, 70-8 billion and 11 billion respectively, which is in the stage of steady growth. The company remains a leader in the field of module fitting equipment, and is expected to cut into other equipment links, bringing new profit growth points. In addition to 3C equipment, the company is also actively cultivating automotive electronics, semiconductor packaging equipment, and so on. It is estimated that the income of the company from 2020 to 2022 is 1.46 billion yuan, the net profit is 1.14 million, the net profit is 1.56 million, the "buy" rating is maintained, and the target price is 45.8 yuan.

Risk factors: the risk of intensified competition among domestic manufacturers of module equipment; the risk of uncertainty in the re-evaluation of the qualifications of national high-tech enterprises