In 2021, the company achieved 7.018 billion yuan in revenue, + 2.55% year-on-year, 904 million yuan in net profit, + 8.39% in the same period last year, and 838 million yuan in non-net profit, + 8.12% in the same period last year. The profit growth rate was higher than that of the company with a stake in income, which was significantly better than that of the previous year. Under the trend of high-end and intelligent display screen, the construction of the company's second growth curve has achieved remarkable results. In 2021, the company's automotive electronics business accounted for more than 1x3 of total revenue. We are optimistic about the continued growth of the company's automotive electronics business, the emerging thinning of UTG and the increase in the contribution of VR/ wearable modules. It is estimated that in 2022-23-24, the company's annual EPS will be 0.52, 0.64, 0.77 yuan, respectively, and 20 times PE in 2022, corresponding to a target price of 10 yuan, maintaining a "buy" rating.

The company's revenue and net profit in 2021 were + 2.55% and 8.39% respectively compared with the same period last year. In 2021, the company achieved revenue of 7.018 billion yuan (year-on-year + 2.55%), net profit of 904 million yuan (+ 8.39%), and non-net profit of 838 million yuan (+ 8.12%). The company's revenue growth is mainly due to the increase in downstream shipments of vehicles and other businesses, and the profit growth rate is higher than the income growth rate is mainly due to the improvement in the operation of Bic Power, a shareholding company. 1) cost side: the company's gross profit margin in 2021 is 23.71%, year-on-year-2.75pcts, which we think is mainly due to the increase in the cost of upstream materials. 2) expense side: the sales / management / R & D / financial expense rate of the company in 2021 is 1.25%, 2.80%, 4.30%, 0.71%, respectively, and in the same caliber, + 0.22/-0.06/+0.39/-0.98pct, respectively. The larger decline in the financial expense rate is mainly due to the fact that the fluctuation of foreign currency exchange rate is less than that of the previous period, and the net exchange loss decreases. 3) cash flow: the operating net cash flow of the company in 2021 was 1.14 billion yuan (down 470 million yuan from the same period last year), mainly due to the payment of employees' salaries and increased procurement of raw materials. In a single quarter, the company's 21Q4 achieved revenue of 1.936 billion yuan (+ 4.5% compared with the same period last year) and net profit of 105 million yuan (+ 179.1% compared with the same period last year). The month-on-month decline in net profit was caused by multiple factors, such as the increase in the proportion of automobile ODM, the increase in the price of raw materials and the provision of bonuses at the end of the year.

2022Q1 company is still facing the rising pressure of raw material prices, and affected by the epidemic downstream start is limited, the company shipments are blocked, the follow-up need to continue to pay attention. 2022Q1, the company achieved revenue of 1.717 billion yuan (year-on-year + 10.5%), revenue growth was mainly driven by vehicle business; net profit of 182 million yuan (- 21.7%) was achieved, and the year-on-year decline was mainly due to the increase in the price of raw materials, the increase in the wages of front-line production staff, the loss of Dongguan Dept (mainly consumer electronics) under the influence of the epidemic, and the increase in R & D management expenses. At present, the company is making great efforts to improve the automation level of the production line, and the follow-up labor cost is expected to be gradually controlled. In addition, since the end of the first quarter, the epidemic in some parts of the country has repeatedly limited logistics and blocked the start of downstream customers, which has a certain impact on the company, and further attention is still needed in the follow-up.

From the perspective of business, the company's vehicle touch display business is growing rapidly, consumer electronics thinning business is advancing steadily, and consumer electronics touch display modules are developing steadily. Among them, 1) vehicle touch display business: we estimate that the revenue will be about 2.8 billion yuan in 2021, the company actively develops the cover business on the basis of providing on-board screen components and screen modules, and successfully introduced new technologies / products such as 3D vehicle curved cover and vehicle dazzling color display to the market in 2021, and obtained a number of 3D vehicle projects, with orders worth billions of yuan. From the client point of view, the new energy car company, the company directly supplies central control screen module products (including ModelX, Model S, Tang, Song, Qin, Han and other models) to T company and BYD, ET7 central control screen, ideal ONE central control screen, red flag H4 vehicle screen, and is currently actively developing electric vehicle customers such as XPeng Inc., Namao, Volkswagen, Guangzhou Automobile, etc. In terms of traditional fuel vehicles, the company has cut into Volkswagen, Ford, Fiat, Mercedes-Benz and Honda through TIER1 such as Alpai, Harman, Sharp, Visteon and Continental Electronics. Looking to the future, with the continuous introduction of the company's customers and the improvement of the mass production progress of the superimposed new production line, the vehicle business is expected to contribute the most important revenue increment to the company. 2) Consumer electronics thinning business: we estimate that the income in 2021 is about 1.5 billion yuan, the company has mastered all the manufacturing processes of flexible foldable glass cover, and completed the layout of the industry chain from glass monomer to display cover. In 2021, the company established Wuhu Dongxin Optoelectronics. At present, it has established a cooperative relationship with domestic and foreign mobile phone brand giants and has obtained the project targeting of major domestic brand customers. The company is speeding up the progress of Dongxin Optoelectronics UTG mass production, and we expect to apply it to Honor, OPPO, vivo and other brand folding mobile phone products. 3) Consumer electronics touch display module:

We estimate that we will achieve about 2.7 billion yuan in revenue in 2021. In terms of small size, the company provides medium and high-end products for the top five international smart wearable customers Apple, Samsung, Fibit, Huawei and Huami, and is further expanding to high-end products. At the same time, the company provides more than 90% of Quest 2 head display modules for Meta solely for PicoNEO series head display modules, and is speeding up the research and development of high-generation VR head display modules equipped with Micro OLED, which has achieved the only fixed point of Quest3; in terms of small and medium-sized sizes, revenue decreased significantly under the influence of big customer Huawei from 2019 to 2020, and the overall sales are in the stage of bottom-building recovery. In terms of medium size, the company currently covers Huawei, Lenovo, Hewlett-Packard and other first-class customers, future shipments are expected to follow the steady development of terminal shipments.

In the future, the company will continue to benefit from high-end + large screen, while folding screen, VR, Watch will contribute to long-term growth momentum. We are optimistic about the downstream demand of the company's main business, and the full layout of the company is expected to continue to benefit in the future. 1) on-board display: we believe that under the background of automobile intelligence, it is a general trend for on-board display to upgrade to "large screen + multi-screen + joint screen + multi-shape". The company has been deeply ploughing the touch display industry chain for a long time, covering both new energy customers and traditional customers. It is expected to continue to benefit from cutting into 70% of the world's mainstream automobile brands through Tier 1. 2) UTG thinning: with the tight layout of SHOVM and other head manufacturers, and the cost reduction brought by the maturity of overlay technology, folding screen terminals are expected to enter a period of large-scale development in 2022. We expect global shipments of folding screen phones to exceed 65 million units in 2025, corresponding to about 73% of 2021-2025 CAGR.

The company has all the manufacturing technology of UTG cover plate, and is expected to cut into the mainstream mobile phone UTG supply chain by virtue of deep technical reserves and long-term cooperative relationship in the future. 3) small size touch display module: as for VR, the company currently supplies Meta and Pico from global Top4 enterprises, which is expected to continue to grow with downstream volume and head customers. In terms of Watch, the company's customers cover the top five international intelligent wearable brand manufacturers, successfully mastering the core technology of flexible OLED module packaging, and providing North American customers with the world's first wearable module products based on flexible OLED panels. In the future, the company is expected to continue to maintain a leading position by virtue of technological advantages and enjoy the industry growth dividend.

Risk factors: weak demand, persistent impact of the epidemic, risk of technology path change, increased competition, exceeding expectations, and so on.

Investment suggestion: we are optimistic that the automotive electronics sector, as the company's second growth curve, will achieve rapid revenue growth under the trend of high-end and large screen on-board display. It is expected that the revenue share of the company's automotive sector will exceed 50% + in 2022. Taking into account the impact of the epidemic on end consumption and materials, we downgrade the company's 2022 EPS forecast to 0.52 yuan in 23 (the original forecast is 0.54 yuan 0.66 yuan), and increase the forecast to 0.77 yuan in 2024. We select A shares in the same layout of consumer electronics IoT and automotive electronics field of Lixun Precision, Gale shares, Sunny Optical Technology and other leaders as comparable companies, their average PE in 2022 is 17 times, while referring to the company's median PE-ttm in the past three years is 25 times, give the company 2022 target PE=20 times, corresponding to the target price of 10 yuan (originally 16 yuan), to maintain the "buy" rating.