Summary of the report:
The bottom of the company's operating performance is reversed, and the inflection point of Q3 is clear.
Since 2020, the company has actively promoted the adjustment of product structure and the optimization of industrial development layout by virtue of its leading R & D advantages. at the same time, benefiting from the rebound of the industry in 2020, the company's 2020Q3 has achieved a reversal in operating performance at the bottom, with operating income of 740 million yuan, year-on-year income of + 4%, month-on-month ratio of + 21%, and net profit from-40 million yuan of Q2 to 10 million yuan of Q3. The company plans to raise 1.5 billion yuan to invest in Mini/Micro LED and the third-generation semiconductor GaN R & D project, opening up long-term development space.
Mini/Micro LED is about to grow, and Mini/Micro LED applications that provide growth momentum for chip faucets will be divided into two categories: Mini LED as a backlight to improve LCD and Mini/Micro LED for direct display (direct display). Mini LED backlight not only improves the performance of LCD, but also has the advantages of cost and life compared with OLED. Mini/ Micro LED direct display has higher performance, cost and technical difficulty, and will start to infiltrate from small-size wearable devices and large-size televisions. In 2020, a large number of new products with Mini LED backlight and Mini/Micro LED direct display were released, with a large number of related investments and large scale, concentrated in the chip field. It is estimated that by 2023, the global Mini LED backlight market will reach 530 million US dollars, and the Mini LED direct display market will reach 640 million US dollars. After two years of decline, Mini LED/Micro LED, which has broad development prospects, will provide a strong driving force for the leader of the LED chip industry. At present, leading enterprises have established barriers to technology, scale and customer resources in the field of Mini / Micro LED, which will further improve the concentration of the industry.
Raise funds for the development of the third generation compound semiconductors, open the space for long-term development, the third generation semiconductors are mainly used in high temperature, high power, high frequency and other device fields because of their better band gap, thermal conductivity and saturated electron drift rate. including new energy vehicles, 5G base stations, radio frequency devices, fast charging, new energy power generation and so on. According to Yole estimates, GaN can maintain excellent performance at 0,900V, accounting for about 68% of the entire power market, or about $10.5 billion. The company plans to raise 300 million yuan to develop GaN devices and open up long-term development space.
Investment suggestion
The company has been deeply engaged in the field of LED chips for many years, and now plans to raise funds for the further development of mini/micro LED and GaN devices, in which mini/micro LED backlight and direct display market is the future development direction, and GaN devices have a broad market space in fast charging, radio frequency and other fields. It is estimated that the company's income in the year 20-22 will be 100 million yuan in 30-33-37, and the net profit will be 0.2 billion yuan, 190 million yuan, corresponding to the valuation of 712-74-47, with reference to the latest valuation of 52 times of SW Electronics on 2020-11-13. Considering that the Mini/MicroLED market is in a period of growth and the company has broad market space, we think it is undervalued and maintain the "recommended" rating.
Risk Tips:
The control of the epidemic is not as expected, and the sales of major customers are not as expected.
