Events:
According to the company's semi-annual performance announcement for 2023, 23H1 achieved operating income of 1.199 billion yuan, an increase of 19.21% over the same period last year; net profit of 25 million yuan, down 41.59% over the same period last year; and basic earnings per share of 0.05yuan per share, which was in line with expectations.
The product structure is high-end & the price has warmed up, and the gross profit margin has improved obviously in the first half of the year. The production and sales of high-end products such as backlight, high light efficiency and silver mirror flip are booming, and the company's capacity utilization rate and production and sales rate remain consistently high. the sales scale reached an all-time high, and the volume and price rise led to the steady growth of business income. In a single quarter, 23Q2 achieved an operating income of 656 million yuan, an increase of 25% over the same period last year, an increase of 20.76% over the same period last year, and a net profit of 33 million yuan, an increase of 79.83% over the same period last year. The gross profit margin of the LED chip and epitaxial wafer business was 20.08%, down 2.53pct from the same period last year and increasing 6.41pct from the previous year, and the gross profit margin in the second quarter of this year has returned to the level of the first half of 2022.
Sustained high R & D investment, Mini LED promotes new development momentum
23H1's R & D expenditure reached 68 million yuan, an increase of 23.90% over the same period last year. Research and development investment continues to increase, high-end product performance improvement, structural upgrading, the company's development momentum is expected to be further enhanced. With the implementation of the "High Light efficiency LED Chip expansion and upgrade Project" and the promotion of the company's "Mini/Micro LED Chip Research and Development and Manufacturing expansion Project", high-end high-end products such as Mini LED and car lighting have been launched one after another, and the company's product categories will be further enriched. At present, the comprehensive yield of Mini LED has reached more than 85%, which is mainly used in mobile phone backlight, TV backlight and other fields, and the products have been supplied in small quantities.
Earnings forecast, valuation and rating
Taking into account that the industry demand is expected to hit bottom and the company's performance is expected to grow against the trend, we estimate that the company's income in 2023-25 will be 24.31% and 26.67% respectively, with a corresponding growth rate of 19.86%, 9.67% and 10.33%, respectively, and its mother's net profit will be 1.39% and 1.64% respectively, with a corresponding growth rate of 319.11%, 17.70% and 28.98%, respectively. The EPS is 0.25 per share, 0.30 per share, 0.38 per share respectively. Considering that the company is the main supplier of LED industry and the industry leader in operational efficiency, it is recommended to keep a close eye on it.
Risk hint: downstream demand is lower than expected risk; product price decline risk; capacity release is less than expected risk.