Liande Equipment focuses on back-end display panel equipment, and the company's performance has entered a period of rapid growth. The company was founded in 1998, completed stock reform in 2012, and listed on the Shenzhen GEM in 2016. It is a leading domestic manufacturer of display module equipment, semiconductor packaging equipment and lithium battery equipment. It has strong technical strength and market influence in the six major fields of 3C intelligent equipment, TV module equipment, automotive electronics, semiconductor packaging and testing equipment, 5G equipment, and lithium battery equipment. Each of the company's six subsidiaries carries out its duties. The core subsidiary, Dongguan Lianpeng Intelligent Equipment Co., Ltd., is mainly responsible for expanding market trade business and integrating advanced material application technology to enhance the company's core competitiveness and profitability. After years of research and development, and benefiting from the penetration of OLED panels in the mobile phone sector and the increase in the localization rate, the company's revenue and profit have grown rapidly in recent years, reaching 128 million yuan in the first three quarters of 2023, a record high.
The penetration rate of OLED panels is rapidly increasing in the field of mobile phones and medium sizes, driving the improvement of Capex in back-end modules.
OLED is expected to usher in a new round of growth on the demand side. In terms of small size, OLED panels are sinking into the low-end smartphone market, driving the OLED penetration rate of mobile phones; in terms of medium size, Apple's mid-size iPad will use OELD screens for the first time starting in 2024, which may drive a significant increase in the penetration rate of mid-size OLEDs. Due to the complex OLED process technology and the widespread application of flexible OLED screens in the future, the demand for back-end equipment is increasing, driving the upgrading of back-end equipment, and doubling the value of back-end module automation equipment. Currently, domestic module production lines are continuously expanding, covering OLED panel and LCD panel module production lines; in the back-end equipment of OLED touch panel production lines, part of the market space involved in Liande equipment is 11.918 billion yuan, and in LCD touch panel production line equipment, part of the market space involved in Liande Equipment is 2,158 billion yuan.
Domestic back-end equipment is developing rapidly, and LianDe equipment is far ahead; new tracks such as Mini LED and in-vehicle displays have been developed, and the company's business scope has been further expanded. Domestic manufacturers of back-end equipment are actively seizing the share of Japan and South Korea, and the domestic substitution process is accelerating. Linked Equipment has a broad layout in the field of back-end process equipment, and is in a leading position in the industry in the field of binding and fitting equipment. At the same time, Liande Equipment is actively exploring the fields of VR\ MR, Mini LED, automotive display, semiconductor packaging and testing equipment, and new energy lithium battery equipment, and is accelerating technology research and market development in this field to expand the scope of the company's business and further enhance the company's performance.
Investment proposal: According to BOE's announcement to invest in the construction of the 8.6th generation AMOLED line, BOE plans to invest 63 billion yuan to build the 8.6th generation OLED line in Chengdu, with a design capacity of 32,000 pieces/month. Investment in high-generation flexible OLED projects will drive a new wave of flexible high-generation factory construction. I am optimistic that OLED panels will sink into the low-end smartphone market. In terms of medium size, the penetration rate of OLED panels in mobile phones will continue to increase. With BOE's 63 billion AMOLED 8.6 generation line construction, Apple's medium size OLED penetration rate has increased rapidly, driving BOE and other back-end modules Capex to increase, driving the company's equipment order volume. The company's revenue is expected to reach 12.5/16.24 billion yuan and net profit of 1.81/2.32 billion yuan. We selected Precision Measurement Electronics and Huaxing Yuanchuang, which specializes in back-end testing equipment, as comparable companies. The average PE ratio corresponding to 2024 was 37.54 times; considering that the company's semiconductor equipment business is still growing and the gross margin is lower than that of precision measurement electronics and Huaxing Yuanchuang, we gave the company 32 times PE, corresponding to a target price of 41.77 yuan, corresponding to a 24-year profit of 232 million, and a market value of 7.424 billion yuan for the first time.
Risk warning: the boom in the panel industry falls short of expectations; vehicle orders fall short of expectations; competition in the smart display equipment industry intensifies; overseas business risks; data measurement is predictive