Event: The company's subsidiary Hongli Display signed a “Cooperation Agreement” with the Huadu District People's Government of Guangzhou City on December 16, 2020. Hongli Display will invest in the construction of Hongli Optoelectronics's new LED backlight display phase II project in Huadu District, mainly focusing on the R&D, production and sales of Mini LED and Micro LED. The project has an investment scale of about 2 billion yuan, and is expected to fully reach an annual output value of about 4 billion yuan after delivery. Investing in the Guangzhou Phase II LED project, leading the MiniLED packaging layout industry: The company plans to invest in the second phase of the new LED backlight display project in Guangzhou, mainly focusing on the R&D, production and sales of Mini LED and Micro LED. The project investment scale is about 2 billion yuan, and the estimated annual output value after delivery is about 4 billion yuan. The construction cycle of this project is 18 months. It is expected to be completed and put into use in the first half of 2022. In terms of miniLED backlighting, it can achieve a production capacity of 160,000 75-inch TVs per month; in terms of display, taking P0.9 as an example, the monthly production capacity will reach 10,000 square meters. This project is another major investment in the MiniLED field after the first phase of the Mini LED project announced by the company in June. Compared with traditional LED packages, miniLED packaging has greatly increased both in value and profitability. In the future, with the explosion of demand for downstream MiniLED products, the company's performance is expected to experience explosive growth. Q3 After deducting the month-on-month improvement in non-return net profit, MiniLED is expected to drive a significant increase in the company's performance: the company achieved revenue of 2.107 billion yuan in the first three quarters, -21.48% year-on-year, and realized net profit of 62 million yuan, +108.74% year-on-year. The company's revenue declined year-on-year in the first three quarters, mainly due to the epidemic, due to delays in production and sales. Looking at Q3 in a single quarter, the company achieved revenue of 777 million yuan, -7.34%, +3.60% month-on-month, and realized net profit of 24 million yuan, -37.99% year-on-year, -14.29% month-on-month; net profit after deducting net profit of 018 million yuan, -51.17% year-on-month, +20% month-on-month. In terms of profit level, Q3 gross profit margin was 21.42%, up 0.93pct year on year, down 1.61pct month on month, net profit margin 2.68%, down 1.41pct year on year, up 0.15pct month on month. The company's Q1 performance declined significantly year-on-year due to the pandemic, and Q2 and Q3 performance continued to improve. Among them, Q3 revenue and net profit after deducting non-return to the mother both increased month-on-month. Looking ahead to Q4 and next year, as the impact of the epidemic on the company is significantly reduced and the miniLED production line is gradually expanded, the company's performance is expected to improve significantly. The Mini LED market space is huge, and downstream demand is about to increase: Mini LED can replace traditional LED backlight sources in LCD displays in backlight applications, greatly improve the display effect of LCD panels, and can approach or even exceed the level of OLED. At the same time, it has 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 at the beginning of next year. TCL has already released a number of Mini LED TVs, and Samsung Electronics will also release the first Mini LED TV next year. According to DSCC data forecasts, MiniLED technology is expected to develop rapidly in 2021. Among them, miniLED backlight shipments will increase from 500,000 units in 2020 to 8.9 million units in 2021. Of these, TVs and tablets will account for the majority of shipments. Samsung's target sales volume is 2 million units, and Mini LED applications are about to be released. Maintaining the “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 124 million yuan, 343 million yuan, and 419 million yuan. The EPS is 0.17 yuan, 0.48 yuan, and 0.59 yuan respectively, and the corresponding PE is 69.14X, 24.96X, and 20.39X 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.