What happened: the company recently released a third-quarter report that the company reached 573 million yuan from January to September 2020, an increase of 16.49% over the same period last year, and its net profit reached 49 million yuan, a decrease of 12.54% over the same period last year.

The company's Q3 reached 221 million yuan in 2020, an increase of 49.42 percent over the same period last year, and its net profit reached 12 million yuan, a decrease of 13.36 percent over the same period last year.

Comments:

The company is the leader of panel module equipment, infiltrating into automotive electronics, semiconductors and other fields.

Since its inception, the company has focused on the R & D, production, sales and service of flat panel display automation module assembly equipment, accumulated profound technical reserves and rich market experience, and established a good market image and brand popularity. At present, the company has established good cooperative relations with many well-known customers, such as Foxconn, Beijing Oriental, Huawei, Apple Inc, Deep Tianma, Lance Technology, Huaxing Optoelectronics, Changxin Technology, Lixun Precision, Vicino, BYD and many other well-known customers. accumulated stable and high-quality customer resources. The company will continue to strengthen the research and development of equipment in the field of module assembly in the rear stage, actively open up application markets in emerging fields such as large-size TV equipment, OLED flat panel display module assembly equipment, AOI testing equipment and semiconductor packaging equipment products, and seize the opportunity to enter the field of automotive electronics and photovoltaic solar energy. Through multi-dimensional product layout, enrich product categories and improve product system. Incubate the R & D technical team model through extended development to form a stable and sustainable development platform.

The business fluctuated slightly in the third quarter, mainly due to order confirmation. Orders with lower gross profit margin were confirmed in the third quarter. The company's 2020Q1-Q3 gross profit margin was 28.54%, 31.7% and 23.46%, respectively. We expect the company's gross profit margin to recover gradually.

Next year, OLED, large size will still be the focus of development.

We expect the industry to have nearly 150,200 OLED module line expansion plans in the next 2 years, and the overall market is expected to reach 30 billion yuan. According to the company's current business scale, there is still a lot of room for development. Previously, we have won the bid for Vicino, BOE and other projects, reflecting the company's strong competitive strength. The progress of large-size equipment is also relatively smooth. The large-size equipment that the company has supplied to Chongqing Huike is aimed at manufacturing flat panel displays between 21.6 and 60 inches. According to the substantial increase in investment from downstream panel manufacturers, it is docking the equipment demand of Chongqing Huike's new production line.

The photovoltaic field is expected to expand rapidly.

In the middle of this year, the company plans to jointly invest with Nie Quan and other eight investors to set up a joint venture Wuxi Lianpeng New Energy equipment Co., Ltd., in which Liande equipment holds 51% of the equity and the remaining investors hold 49% of the equity. In addition, other investors (partnership) have mature R & D, production and debugging teams in the photovoltaic new energy equipment industry, with 31 patents, 15 years of experience in the industry, and the roles of Party An and Party B. it has an inherent advantage in the equipment development of the new process with the company.

Wuxi Lianpeng New Energy equipment Co., Ltd. the equipment experience of the cooperation team is mainly in the components, take the lead in the introduction of stack welding machine and applied for a large number of patents, the company's R & D and production of DH180S bus belt welding equipment as the company's main products, high market recognition, is expected to produce economic benefits soon. The direction of the new equipment in the later stage of the joint venture is ALD, cleaning, non-grid packaging, non-standard automation, welding machines and other equipment.

Dingzeng will expand production capacity again, and automotive electronics, large size, semiconductors and other directions will go hand in hand.

The company plans to issue shares to specific objects to raise no more than 800 million yuan, of which 560 million yuan is used for "Automotive Electronic display Intelligent equipment Construction Project", "large-size TV Module Intelligent equipment Construction Project" and "Semiconductor closed Test Intelligent equipment Construction Project". The operating income of the above projects is expected to be 320 million yuan, 228.5 million yuan and 230 million yuan respectively after reaching production. The remaining 240 million yuan will replenish the working capital. Nie Quan, the actual controller of the company, intends to subscribe for the company's non-public offering shares in cash, with a total subscription amount of not less than 15 million yuan (including capital) and no more than 30 million yuan (including capital).

The company is actively engaged in the R & D and development of large-size module bonding equipment and TV module, and successfully achieved production and sales. As of the middle of this year, the issuer has accumulated 110.3971 million yuan of orders for large-size TV and automotive electronic flat panel display. In the field of semiconductor equipment, the company is engaged in the development of semiconductor flip equipment (completed) and semiconductor COW packaging equipment, which has laid a good technical foundation for the company to enter the semiconductor field.

Profitability forecasting and valuation. We believe that the company's strategy is clear, deep ploughing panel manufacturing industry, in recent years, continue to invest in research and development, respond to changes in market demand, firmly optimistic about the future development of the company.

We estimate that the 20-21 net profit of the shareholders belonging to the parent company will be 0.88 and 177 million respectively, corresponding to a valuation of 50 and 25 times, and maintain a buy rating.

Risk tips: OLED production line, LCD large-scale production capacity progress is not as expected, equipment import replacement rate is not as expected.