Focus on LED lighting, covering commercial and industrial lighting fields. Established in 2010, Minbang Optoelectronics is a high-tech enterprise engaged in green lighting business. It is mainly engaged in R&D, design, manufacturing, sales and service of LED lighting products. It has always focused on serving overseas regional brands and engineers, and providing customers with ODM products in the field of commercial lighting and industrial lighting. In 2020-2022, the company's revenue and performance fluctuated due to factors such as repeated global epidemics, economic friction between China and the US, and downward pressure on European and American economies. In 2023, as the external environment gradually improved, the company's revenue resumed growth. 23Q1-3 achieved revenue of 1,139 billion yuan, an increase of 1.60% over the previous year; the profit side was affected by high exchange earnings in the same period in '22, and 23Q1-3 achieved net profit of 186 million yuan, a year-on-year decrease of 5.91%.
The LED lighting industry pattern is scattered, and the penetration rate of commercial lighting is higher than that of industrial lighting. Compared with traditional light sources such as incandescent lamps, LED light sources have the characteristics of low energy consumption, long life, high light efficiency, and rich colors. In recent years, they have benefited from the development of the green economy and smart homes, and the global LED lighting market has continued to increase in size. At the same time, since the entry threshold for the LED lighting industry is relatively low and there are many market participants, the domestic LED lighting market concentration is low, leading companies have less control over the market, and market competition is fierce. The market share of China's LED lighting industry in 2021 was only 3.88%. In terms of segmentation, commercial lighting is the largest downstream market for LEDs, and thanks to the growing demand for functionality in commercial lighting, LED penetration is already at a high level. However, industrial lighting is limited by the harsh usage environment, the entry threshold is high, and the LED replacement process is late. Currently, the penetration rate is still less than 10%. As the advantages of LED industrial lighting continue to be reflected and energy saving and environmental protection policy support, the LED penetration rate in the industrial lighting field is expected to continue to increase.
Lay out the non-standard LED lighting market, customer accumulation+downstream market expansion to open up long-term growth space. Facing the competitive LED lighting market, the company grasps the differentiated market needs of commercial lighting and industrial lighting, focuses on serving overseas regional brands and engineers, meets the characteristics of customer small-batch, multi-batch and differentiated product requirements, provides customers with services such as customized lighting design, lighting efficiency design, application function integration, etc., and develops products that meet the individual needs of customers, thus forming differentiated competition with leading brands and avoiding the fiercely competitive standardized LED lighting product market. In recent years, in addition to the existing product line, the company has actively begun to expand new downstream application fields, successively expanding into new fields such as street lights, stadiums, explosion-proof lights, emergency lighting, and plant lighting. Combined with the huge customer pool that the company has accumulated over the years, it has brought new growth impetus to the company and opened up space for long-term growth.
It was covered for the first time, and an investment rating of “increased holdings” was given. We expect the company to achieve operating income of 1,538/17.86/2,066 billion yuan in 2023-2025, an increase of 5.0%/16.2%/15.7%, respectively; it is expected to achieve net profit of 235/2.79/330 billion yuan, respectively, -4.4%/+18.9%/+18.2% year-on-year. The comparable company we selected had a PE of 19X in 2024, and the PE of the company in 2024 was 16X. Corresponding to the current market capitalization, there is room for an increase in market value of 18%, and for the first time, it was given an “increase in holdings” rating.
Risk warning: risk of exchange rate fluctuations; risk of raw material price fluctuations; risk of increased market competition.