The company's product backlight modules are mainly used in notebook computers, in-vehicle displays, etc., and it has established cooperative relationships with well-known display panel manufacturers such as BOE, Huaxing Optoelectronics, Intron Optoelectronics, Shenzhen Tianma, and Huike, and the financial situation is relatively stable. The company mainly participates in the backlight display module assembly process in the LCD panel process. The company's downstream customers are concentrated. BOE is the company's largest customer. BOE's sales in 2022 accounted for 80.18% of the company's total sales. The company focuses on R&D innovation and continues to increase R&D investment. In 2022, the company invested 134 million yuan in R&D, accounting for 6.08% of revenue. Affected by the slowdown in demand in the global electronics industry, the company's revenue declined in 2022, but revenue and net profit to mother increased in the first three quarters of 2023, and the company's performance is expected to reach an inflection point as inventory is gradually cleared.
AIPC is driving the growth in demand for downstream laptops. The laptop industry is expected to reach an inflection point, and the company is expected to directly benefit.
According to the “AI PC Acceleration Plan” announced by Intel, it is expected that more than 100 million AI PCs will be launched by 2025, and we believe that client-side AI industry applications are expected to accelerate. AI PCs can target scenarios such as work, study, and life, and provide users with personalized services in general scenarios. The arrival of AI PCs marks a major turning point in the PC industry, and Canalys expects the commercial market to usher in a wave of AI PCs from 2025 to 2030.
A new AIPC wave is expected to occur in 2024 H1, and the AIPC shipment penetration rate will reach 60% in 2027. The company is deeply involved in the field of laptop backlight modules and is expected to benefit from the development of the AIPC industry.
Automotive intelligence is driving a wave of innovation in the global automotive display industry, and the company is developing automotive Mini LED backlight products. It is expected that automobile intelligence and electrification will drive the continuous growth of the automotive electronic display panel market such as HUD and LCD central control. According to Global Market Insights, the automotive display market is expected to reach US$24 billion in 2025, with a compound growth rate of 12% from 2020 to 2025. The market share of new products such as central control screens, dual screens, and in-car entertainment screens continues to rise, and the development of automotive screens has brought new growth points to the backlight display module industry. Currently, the automotive display industry is gradually developing in the direction of large screen, high definition, split screen and personalization. Mini LED backlit displays will be highly cost-effective. Since 2022, various models, including Cadillac LYRIQ, Ideal L9, and Feifan R7, have been equipped with Mini LED backlit screens and delivered to customers. The company already has mature in-vehicle screen design and process methods, including bonding technology, glue types, process types, etc., and has realized a variety of in-vehicle screens, including two screens, triple screens, Z-screens, etc., which can be integrated into a single LCM, which includes three units for driving, central control, and co-driver. The company is developing automotive mini-LED backlight products, and has cooperated with many Tier 1 suppliers and automakers for automotive Mini LED backlight products.
Profit forecast and investment rating: The company is deeply involved in the field of laptop backlight modules, and AIPC and in-vehicle displays drive the company's growth. The company's EPS for 2023-2025 is expected to be 0.31 yuan, 0.75 yuan, and 1.33 yuan, respectively. It was covered for the first time and given a “recommended” rating.
Risk warning: Laptop sales fall short of expectations, AIPC development falls short of expectations, customer development falls short of expectations, and mini-LED imports fall short of expectations.