On October 26, 2023, Liande equipment released its report for the third quarter of 2023, with outstanding revenue and profits. In the first three quarters of 2023, the company achieved a total operating income of 886 million yuan, an increase of 35.25% over the same period last year, and a net profit of 114 million yuan, an increase of 205.12% over the same period last year. 2023Q3 achieved a total operating income of 339 million yuan, an increase of 39.86% over the same period last year, an increase of 21.35% over the previous year, and a net profit of 38 million yuan, an increase of 234.25% and 5.38% over the same period last year.

The downstream panel is in the price recovery cycle and the profit margin is open. The display automation module equipment produced by the company is mainly used in the module assembly process in the middle and back of the flat panel display surface, including TFT-LCD, OLED, Mini LED and Micro LED display modules. Since March 2023, panel market prices have bottomed out and rebounded, stimulating panel manufacturers to invest and expand production, the production equipment industry has a certain lag, and the favorable impact of panel price recovery has gradually begun to appear. At the same time, the increase in panel prices to upstream equipment companies has also brought an increase in profit margins. In the first three quarters of 2023, the company's gross profit margin was 33.77%, up 2.70 percentage points from a year earlier. The company mainly uses direct sales, which can save sales expenses after establishing a long-term and stable cooperative relationship with customers. 2023Q3's sales expenses account for 3.67% of revenue, down 2.05% from the same period last year, and continue to open up profit margins.

Continuous harvest of large orders, development ushered in the opportunity of rising volume and price. On February 17 and July 26, 2023, the company twice harvested 85.315 million yuan and 208 million bid winning notices for the 6th generation AMOLED (flexible) production line project in BOE Chongqing. On September 14, 2023, the company once again announced that it had received the bid-winning notice of 492 million yuan for the BOE high-end module project. On October 26, the company won the bid for the 6th generation flexible active matrix organic light-emitting display device (AMOLED) module production line project with a winning price of 208 million yuan. The company has excellent order acquisition ability, superimposing the downstream price recovery cycle, we think the company can seize the opportunity of volume and price rise and achieve rapid development.

New technology stimulates new demand and is optimistic about the prospect of flexible display market. Folding screen phones are the only segment in the current depressed mobile phone market that maintains an upward trend, driving demand for flexible AMOLED. According to McGuillo, global shipments of flexible AMOLED for smartphones will reach 491m in 2023, an increase of more than 25 per cent year-on-year. The global OLED industry has formed a consensus that flexible AMOLED is the direction of technology development, and flexible AMOLED is also becoming the demand orientation of wearable devices, VR, MR and other products. The company has repeatedly won large orders for AMOLED production line equipment, which shows that the company is ahead of technology in this direction, and we are optimistic about the long-term development of the company in the direction of flexible display.

[investment advice]

In the first three quarters of 2023, Liande equipment continued its high revenue and profit growth. In the market, the rebound in downstream panel prices is conducive to the improvement of the company's gross profit, while panel manufacturers continue to increase investment in new display technology production lines to bring incremental orders, the company has a strong ability to obtain orders, and will usher in a growth period of rising volume and price. In addition, we are optimistic about the long-term potential of flexible display, which will give impetus to the long-term development of the company. We maintain our previous profit forecast and estimate that the company's revenue in 2025 will be 1.3011623Universe 1.942 billion respectively, and the net profit of homing will be 1.75Unix 2.15Universe 2.60 million, respectively, corresponding to EPS of 0.99200Universe 1.46, and corresponding to PE of 31-25-21, respectively, maintaining the "overweight" rating.

[risk Tip]

With the risk of intensified market competition, enterprises and new entrants in the same industry may increase investment to achieve technological innovation, or marketing by means of price reduction, resulting in increasingly fierce competition and compressed profit margins of the company. The risk that the downstream demand of ◆ is lower than expected. The company's products are mainly used in the consumer electronics field. At present, the prosperity of the consumer electronics industry is still low, downstream enterprises may reduce capital expenditure, and the company's products are at the risk of insufficient demand.

The risk of failure in new product research and development shows that the technology iteration of the technology is fast, and the company may not accurately and timely grasp the market demand, resulting in the new product can not be recognized by the market.