Main points:
Backlit faucet, fast growth of main business scale
According to GGII data, the output value of LED packaging in China reached 113 billion yuan in 2019, an increase of 17.71% over the same period last year. CAGR 16.12% since 2012. The company's revenue increased from 288 million yuan in 2010 to 2.506 billion yuan in 2019, with a CAGR of 27.19% in nine years. In 2019, backlit LED devices accounted for 76.54% of the company's revenue, the company's LED backlight package production was the largest in the world, small and medium-sized sales ranked second in the world, and small-size backlight ranked first in China's market share. We believe that the company's future business small and medium size steady growth, medium size is expected to increase, large size space can be expected.
Sound operation and high quality of financial data
Based on the three bases of Shenzhen, Huizhou and Wuhu, the company actively expands overseas markets and cuts into the supply chain of international giants. Overseas revenue growth has maintained more than 20% in the past two years. The company's assets have grown steadily, its debt structure is reasonable, and its R & D investment has maintained a revenue share of about 4% all the year round. It has been in the leading level in the same industry for a long time in terms of capacity utilization, product yield, gross profit margin, return on net assets, inventory management and solvency.
Getting ready to benefit from the outbreak of MINI LED
Mini LED backlight has fine partition function, combined with regional dimming technology (Local Dimming), quantum dots (QD) technology, can comprehensively improve the picture quality of LCD display, with the advantages of energy saving, light and thin, uniform heat dissipation, wide color gamut, high contrast, long service life and so on. Apple Inc iMac and iPad are about to be introduced into Mini LED, and the first product that uses Mini LED backlight may be available in the fourth quarter of this year. The Android camp has also accelerated the launch of Mini LED backlight products, and Mini LED 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 6.5 billion yuan and 9.75 billion yuan respectively. As a small-size backlight faucet, the company has earlier layout in Mini LED and is expected to fully benefit from the outbreak of Mini LED backlight applications.
Plan ahead and develop new growth horizontally
The company is prepared in advance to actively layout LED automotive lighting and optical film business. LEDinside predicts that the output value of domestic automotive LED will reach 9.2 billion yuan in 2020. Compared with traditional halogen lamp and xenon lamp, LED lamp has the advantages of small size, fast response time, high luminous efficiency and high reliability. The company's products successfully passed the AEC-Q102 reliability and quality verification of the International Association of Automotive Electronics in 2018 and have entered the supply chain system of many automotive module factories. Since 2016, the company's optical film production and sales have maintained a high growth rate. Optical film plays an important role in the backlight module, the company's optical film products are mainly used for small-size LCD incremental uniform light display, is the horizontal extension of the existing main business, sharing customer resources with the main business, can achieve synergy.
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. Cover for the first time, giving the company a "buy" rating.
Risk hint
The penetration of Mini LED was not as expected; the impact of the epidemic exceeded expectations; the demand for consumer electronics such as mobile phones, televisions and PC was sluggish; and the competition in the LED packaging industry intensified.