What happened: the company released its three-quarter report on October 27, 2022. In the first three quarters of 2022, the company achieved 1.659 billion yuan in revenue, down 3.98% from the same period last year; the net profit returned to its mother was 156 million yuan, down 19.40% from the same period last year; and 130 million yuan was deducted from non-net profit, down 17.17% from the same period last year. In 2022, the revenue of Q3 company was 587 million yuan, down 0.11% from the same period last year, up 4.08% from the previous year; the net profit from the parent was 44 million yuan, down 35.84% from the same period last year and 24.81% from the previous year; and the non-net profit was 34 million yuan, down 37.78% from the same period last year and 31.06% from the previous year.
After the recovery of demand has been delayed, profitability is under short-term pressure: the company's performance declined in the first three quarters, of which Q3 single-quarter sales gross profit margin in 2022 was 23.19%, month-on-month decline of 0.96pct, net interest rate of 7.55%, month-on-month decline of 3.28pct, mainly due to the increase in sales expenses. In terms of expenses, the sales expenses / management expenses / R & D expenses / financial expenses in the first three quarters were 0.48 million respectively. The financial expenses decreased by 245.85% compared with the same period last year, mainly due to the increase in foreign currency exchange income. Due to the instability of the global economy in 2022, there are many domestic outbreaks, resulting in greater market pressure on consumer electronics terminals and short-term pressure on corporate profitability. But at the same time, the continuous popularity of new energy vehicles and Mini LED emerging markets have begun to expand, which is expected to become a new growth point of the company in the future.
Automotive LED business continues to develop, and the introduction of customers is progressing smoothly: with the widespread popularity of new energy vehicles and the arrival of the trend of automobile intelligent automation, the demand for multi-screen, large-screen and high-definition vehicles continues to rise. Overall, the competitive pattern of automotive products is better than that of consumer electronics.
The company's automotive business has grown strongly in recent years. Automotive backlight products have fully entered the global customer supply chain system, based on the display screen in the car cockpit has a high proportion of value, the future market capacity will continue to increase. The company's gauge-grade MiniLED backlight can be used in vehicle electronics such as in-vehicle instrumentation, central navigation, rear entertainment and rearview mirror screen backlight, while the gauge-grade MiniLED direct display module can be used in vehicle internal atmosphere, external lighting and external media display. With the deepening of customer cooperation in the future, the company's automotive LED business is expected to break out.
The traditional LED industry is waiting for recovery, and Mini LED shows that the application starts rapidly: the traditional LED industry has entered a mature period, and the industry concentration is further enhanced, forming a competitive pattern of the strong and the strong. Although the LED industry is affected by the weak demand for consumer electronics downstream, Mini LED emerging markets have begun to take volume, and Mini LED is expected to succeed the traditional LED industry and become a strong driving force for future development.
According to Arizton data, the global Mini LED market will grow from US $150 million in 2021 to US $2.32 billion in 2024, and CARG will be 149.2% in 2021-2024. In addition, with the rapid development of automobile intelligence, the vehicle screen is showing a large screen, multi-screen, high-definition, interactive, pleomorphic and other development trends, automotive LED will also usher in a period of rapid development. According to MRFR statistics, it is expected that the size of the vehicle display market will continue to grow to $39.7 billion by 2027, with a compound growth rate of 13% from 2021 to 2027. At present, the company is put into production in three places at the same time, and the production bases of Huizhou and Wuhu are in the climbing period of capacity release, and they are still laying out new production lines; thanks to the strong demand of the current market, the company's automotive LED products and Mini products are booming.
Maintain "overweight" rating: we are optimistic about the company's leading position in the backlit LED market and accelerate its layout in the Mini LED field, which is expected to become a driving force for the company's performance growth in the future. It is estimated that the homing net profit of the company from 2022 to 2024 will be RMB 304x393 million, EPS is RMB 0.15max, and PE is about 27X, 18X and 14X respectively, maintaining the "overweight" rating.
Risk tips: capacity release is not as expected, downstream demand is not as expected, Mini LED penetration is not as expected, and the impact of the epidemic is higher than expected.
