Revenue is growing steadily, and high investment in R&D strengthens technology reserves. The revenue GAGR in the past three years was as high as 39.03%, and the net profit GAGR of the mother was 28.14%. The slight decline in net profit of the mother in 2019 was mainly due to a large year-on-year increase in R&D expenses.
OLEDs in display panels are gradually replacing LCDs, freeing up the demand for OLED module equipment. In 2019, the share of global OLED panels in global display panels rose from 11% in 2016 to 19%. It is predicted that the penetration rate will reach 23% in 2022, and market demand will rise. In 2020-2022, China's OLED production line added more than 400 billion yuan of investment, and panel manufacturers will continue to build new production lines and put them into operation one after another. In 2020, H1's OLED equipment sales revenue accounted for 30.71% of equipment product sales revenue. In 2020, the company signed OLED equipment orders totaling 222 million yuan with BOE and Visiono. It is also expected that sales revenue and share of OLED equipment will continue to grow in the future, leading to an increase in the scale of overall revenue.
Technology expansion expands the fields of automotive electronic displays, photovoltaics, and semiconductors, new businesses have blossomed more, and code production capacity will increase. It is planned to raise 800 million yuan from the additional issuance to invest in the new business. In September 2020, the Wuxi Lianpeng Joint Venture Company was established to enter a new field of photovoltaic module equipment; large-scale TVs and automotive electronic displays are synonymous with the company's original smart display products and technology. All four businesses have now been sold, with sales revenue totaling 111 million yuan as of September 2020.
Performance forecast and investment suggestions: Liande Equipment is deeply involved in the field of flat panel display automation. In addition to promoting equipment import substitution in the original consumer electronics field, it is also successfully applied to fields such as automotive electronics, large TV modules, semiconductor packaging and testing projects through technology extension and application fields. Affected by the epidemic, performance was low in 20 years. It is expected that net profit will grow rapidly in 21-22. Net profit is expected to increase 73% by 150 million yuan in '21, net profit of 220 million yuan in '22, giving 30 times PE, target market value of 6.6 billion yuan, target price of 45 yuan. Highly recommended!
Risk warning: Downstream market demand growth is declining, industry competition is intensifying, and new business development falls short of expectations.