Core views
Due to weak demand for consumer electronics and a decline in tablet testing and wearable testing businesses, the company's performance in the first three quarters was under pressure. At the same time, we have seen a gradual improvement in Q3 consumer terminals. Stimulated by demand for mobile phone innovation and replacement, it has gradually bottomed out and rebounded. Furthermore, with Apple's expectation that Vision Pro will be officially launched in January 2024, the MR industry chain explosion ushered in the first year. OLED screens will accelerate penetration in the medium size field, and the company's tablet inspection business will continue to lead, and the company's tablet inspection business will continue to lead, and there will be a great deal of flexibility in MR and medium size testing. Furthermore, semiconductor testing and electronic testing for new energy vehicles have maintained continuous growth in line with downstream demand.
occurrences
Apple expects Vision Pro to be officially released in January 2024, and that OLED screens will accelerate penetration in mid-size (tablets, notebooks).
Brief review
Apple MR begins a new consumer electronics cycle, and is expected to enter the first year after launch. According to the “Interface News” report, Apple will officially mass-produce the first-generation MR product Vision Pro in December. The first batch is about 400,000 units. The sales target for 2024 is 1 million units. Furthermore, Apple expects Vision Pro to be officially released in January 2024.
The mass production of Vision Pro will first bring growth opportunities to hardware equipment manufacturers. Apple released the first MR headset Vision Pro, which has a benchmark effect in the industry for the application of innovative technologies and top configurations such as related chips, optics, display, and interaction. AppleVision Pro is equipped with core technologies such as dual chips, 3P Pancake solutions, single-lens 4K Micro OLED, eye movement+hand tracking interaction, etc., which can achieve innovative functions such as aerial typing, smooth switching between VR/AR modes, and iris scanning, bringing users a new virtual reality experience. It is a major disruptive change in the industry. Compared with other competitors in the industry, it has obvious advantages and shows the unprecedented technology of other equipment manufacturers. According to IDC's forecast, global VR/VR headset shipments will exceed 40 million units in 2024. The company's flat panel inspection business continues to lead, benefiting from demand for emerging consumer electronics products. New micro display technologies such as Mini/Micro LED and Micro OLED will have broad market prospects in the future, and will also drive increased demand for supporting flat panel display testing equipment in the future.
OLED screens accelerate penetration in the IT field and start a new growth curve
Mobile phone manufacturers are actively introducing OLED panels, and the penetration rate is expected to exceed 60% in 2026. In the future, OLED panels will continue to increase in the penetration rate of mobile applications, while OLED's penetration in other applications such as TVs, laptop markets, and tablets is less than 3%. As the iPad plans to install OLED screens in 2024, OLED IT's penetration will accelerate, opening up the OLED market for mid-size applications. According to Omdia data, shipments of OLED panels for notebooks and tablets will jump from 4.88 million pieces in 2020 to 63.4 million in 2027, with an average annual growth rate of 44.2%. The company is a mobile phone screen inspection equipment supplier designated by Apple. It is expected that a new growth curve will begin as the iPad is equipped with OLED screens in the future.
A pioneer in panel inspection equipment, MR and OLED medium size inspection ushered in flexible space. We expect revenue of 18.00/25.00/3.6 billion yuan in 2023-2025, a year-on-year increase of -22.41%, 38.89%, and 44%, net profit of 2.12/2.98/427 million yuan, EPS of 0.48/0.68/0.97 yuan/share, corresponding to 2024 PE of 51X. As a pioneer in panel equipment testing equipment, MR and OLED medium size inspection will usher in flexible space. The company's NEV testing business has entered Geely, power batteries have entered high-end customers such as Sunwoda, and various types of conductor testing equipment have been released one after another. Considering that new energy vehicles and semiconductor tests have been released one after another, and MR and OLED medium size testing have ushered in a second growth curve, we gave a “buy” rating.
Risk analysis
Risk of high customer concentration: The company's main products are flat panel display testing equipment, semiconductor testing equipment, and assembly and testing equipment for wearable products. It is used in well-known downstream tablet modules, integrated circuit manufacturers and consumer electronics terminal brands. The downstream concentration is high. Affected by this, the company's sales from major customers account for a relatively high share of sales from major customers, so the business conditions of the main customer Apple and its industry chain manufacturers have a great impact on the company. In the short term, when the share of sales revenue from major customers is still high, if the company's cooperative relationship between the two parties undergoes major adverse changes due to the quality of products and services that do not meet the requirements of major customers, or if the direct order demand of major customers falls sharply in the future due to deteriorating business conditions, it may have a significant adverse impact on the company's business performance.