Minbang Optoelectronics: Leading Commercial & Industrial LED Lighting Company
The company focuses on commercial & industrial LED lighting. It is a leading export ODM/OEM enterprise in related fields. Rich product development and manufacturing experience and accurate grasp of market demand trends in various regions have enabled the company to gradually grow into a leading lighting company in China's lighting export industry, maintaining a high level of net interest rate and ROE throughout the year.
There is still room to increase penetration in overseas markets. The company's manufacturing level is leading in the industry. Judging from the market size, there is still room for improvement in the LED penetration rate in the above fields: commercial lighting, of which, according to Frost & Sullivan data, the global commercial LED lighting market space could reach US$22.285 billion in 2019; in terms of industrial lighting, according to Mordor Intelligence data, the global industrial lighting market is estimated to reach US$6.176 billion in 2020. By 2026, the market size will reach US$8.168 billion (approximately RMB 60 billion).
Judging from the industrial chain structure, downstream brand chains in overseas markets coexist with specialty brands. They present the characteristics of “small batch, multiple batch” for ODM/OEM customer needs, and have high requirements for flexible production and ability to respond quickly to demand. As a leading industrial and commercial lighting enterprise, the company has strong manufacturing capabilities and ability to respond quickly to demand.
The North American market is expected to expand at an accelerated pace, and a new business matrix will gradually take shape
Looking ahead, in addition to the increase in penetration rate at the industry level, we believe that the following directions are expected to contribute to the company's revenue growth: from a regional perspective, the company has focused on markets such as Europe, but the North American region's revenue scale is still relatively low, and the North American market, as the number one destination for China's lighting exports, has a lot of room for expansion. From a category perspective, the company's brand matrix for different categories is gradually being formed, and it is expected to create incremental growth in the fields of plant lighting, emergency lighting, and beauty lighting in the future.
Investment suggestion: The company is deeply involved in the field of LED commercial/industrial lighting in overseas markets, and is expected to fully benefit from the increase in LED penetration in overseas markets in commercial and industrial scenarios, and at the same time accelerate progress in developing the US market after the epidemic. We expect the company's net profit to be 2.46, 2.92, and 342 million yuan respectively in 23-25 years, corresponding to a price-earnings ratio of 16.3x/13.7x/11.7x for 23-25 years, respectively. According to the relative valuation method, the company will be given 17x PE in 24 years, corresponding to a target price of 47.4 Yuan, covered for the first time, gave it an “increase in weight” rating.
Risk warning: the risk that the LED penetration rate in the commercial & industrial lighting sector will fall short of expectations; the risk that the US market will expand less than expected; the risk that industry competition will increase; the risk that new categories will not expand as expected; and the company's market value in circulation is small.