Incidents: The company announced its 2020 semi-annual report. In the first half of 2020, it achieved revenue of 1,330 billion yuan, a year-on-year decrease of 27.90%; realized net profit of 39 million yuan, reversal of losses over the previous year; and net profit of 119 million yuan was deducted, reversing losses year-on-year. The Q2 quarter of 2020 achieved revenue of 750 million yuan, a year-on-year decrease of 16.95%, an increase of 29.09%; realized net profit of 28 million yuan, a year-on-year increase of 154.55%; net profit after deduction of net profit of 0.15 million yuan, a year-on-year increase of 275.00% H1's performance is in line with expectations, and is expected to increase significantly in the second half of the year: the company's revenue for the first half of the year declined compared to the same period last year, mainly due to the epidemic, production and sales delays, and net profit of the mother's net profit reversed losses year on year. The reason is that the company resumed work and production gradually stabilized production. At the same time, there was no impairment of goodwill in the first half of the year, and the first half of the year's performance was in line with expectations. In the first half of the year, the company's overall gross profit margin was 20.79%, up 0.84 pct from the previous year, and gross margin increased steadily. Judging from the period expenses, the company's sales, management, R&D, and financial expenses have all decreased compared to the same period last year. By business, the LED packaging business revenue was 1,059 million yuan, down 16.88% year on year, gross margin was 20.54%, down 2.35 pct year on year. LED packaging maintained a good level of profit under the influence of the epidemic; LED automotive lighting business revenue was 215 million yuan, down 15.87% year on year, and gross profit margin was 20.41%, up 8.42 pct year on year. In the first half of the year, automotive lighting was affected by factors such as falling prices and asset impairment. Yishan Auto Lamp lost money in the first half of the year. In the future, Yishan Auto Lamp will further develop and expand new customers, strengthen supply chain management, guarantee the supply of raw materials, and reduce material costs. Furthermore, Folta Signal has performed well. In the future, it will use the resources of its US subsidiary to intervene in the local automotive front equipment market and seek more opportunities for business cooperation. Looking at the Q2 quarter, the company's Q2 revenue and net profit both improved significantly month-on-month. Looking ahead to the second half of the year, the impact of the epidemic on the company will decrease markedly. It is expected that the company's various businesses will improve significantly compared to the first half of the year. The Mini LED packaging layout is leading the industry and is expected to drive explosive growth in the company's performance: the company has many years of R&D experience in Mini LED, leading the technical level in the industry, and has glass-based and PCB-based miniiled packaging capabilities. Product application areas include TVs, monitors, laptops, VR, etc. Among them, TVs have cooperated with mainstream domestic panel manufacturers, and have now achieved small-batch delivery. In addition, the company signed a “Cooperation Agreement” with the Huadu District Government on June 17. The company will invest in the construction of a new LED backlight display project in Huadu District, including Mini LED backlight and display. The first phase of the investment amount is about 150 million yuan. Currently, the plant construction of the new backlight display project has been completed, and it is expected that the decoration and equipment installation of the Mini LED smart workshop will be completed quickly. Compared with traditional LED packages, the value and profitability of mini LED packages have greatly increased. In the future, with the explosion of demand for downstream MiniLED products, the company's performance is expected to experience explosive growth. Ultra-clear displays are gaining momentum, and the volume of mini LED applications is adding brilliance: Mini LED is an LED chip with a size of 100 microns. In backlight applications, mini LEDs can replace traditional LED backlights in LCD displays. They have the characteristics of energy efficiency, lightness, wide color gamut, ultra-high contrast, and fine dynamic zoning. They can greatly improve the display effect of LCD panels, and can approach or even exceed the level of OLED. At the same time, they have longevity and cost advantages over OLEDs. Mini LED has attracted much attention due to its broad market prospects. Panel manufacturers and machine manufacturers are speeding up the introduction of MiniLED products. Apple expects to release iPad Pro and Macbook Pro products with mini LED screens from the end of this year to the beginning of next year. BOE has a layout for both backlighting and direct display applications. Mass production of glass-based Mini LED backlight products will begin in the second half of this year. TCL showcased 75" 8K at the International Display Expo (UDE 2020) exhibition held at the end of July MiniLED backlit TVs. Televisions equipped with MiniLED technology were also released in overseas markets in August. Among them, 65-inch TVs are priced at 900 US dollars. Compared with OLED TVs, the price advantage is obvious, and the number of mini LED applications is about to be released. Give a “recommended” rating: Optimistic about the company's leading layout in Mini LED packaging. With the expansion of downstream Mini LED applications, it is expected to drive a significant increase in the company's performance. The estimated net profit of the company from 2020 to 2022 is 136 million yuan, 373 million yuan, and 461 million yuan. The EPS is 0.19 yuan, 0.53 yuan, and 0.65 yuan respectively, and the corresponding PE is 63.92X, 23.37X, and 18.87X respectively. Risk warning: The impact of the epidemic has exceeded expectations, the price reduction of LED packaging has exceeded expectations, demand for Mini LEDs has fallen short of expectations, and the release of production capacity has fallen short of expectations.