Core views
Kangguan Technology is a global IFPD & TV foundry leader. At the same time, it has adopted a “own brand first, global ODM combined” strategy to develop professional and innovative display products. Affected by the global IFPD's high base+high inventory, the company's interactive tablet business has continued to decline since 2022H2; at the same time, against the backdrop of increased shipment volume+concentration in the TV OEM market and rapid release of emerging categories, the company has demonstrated its core competitive advantage, and its performance has shown tenacity. This article explores the inflection points and spaces of the company's various businesses by answering three questions.
summary
Where is the inflection point of interactive tablets? Education IFPD focuses on the implementation of European and American policies and the outbreak of emerging markets in the short term. In the long term, it will usher in switching cycles and structural upgrades. IFPD is recovering at the conference. Kangguan maintains the leading position of overseas IFPD foundry, and core customers are actively promoting national projects. The interactive tablet business is expected to remain stable in the next three years.
What is the growth rate of smart TVs? Demand for TV in emerging markets continues to grow. At the same time, the downturn in consumption is indirectly driving the increase in the proportion of contract processing and the growth of the OEM market, and OEM orders are gathering at the head. Kangguan has formed a KDM service model for emerging markets. Focusing on the Local King brand, the TV business is expected to grow.
How much room is there for innovation to be displayed? Kang Guan has adopted the “own brand first, global ODM combined” strategy. Among them, e-sports displays enjoy industry development dividends and maintain high growth at home and abroad; the share of the Xishinscreen ODM+ private brand is high, and the market size is expected to grow multiples; learning the tablet market is developing rapidly, and Kang Guan's competition for ODM orders is expected to contribute to the increase.
Investment suggestions: Interactive flat screen and TV foundry expands new customers in new markets, and the revenue scale of independent brands and innovative categories expands rapidly. We predict that in 2023-2025, the company will achieve net profit of 12.03/13.96/1.61 billion yuan, corresponding EPS of 1.76/2.04/2.35 yuan, and the current stock price corresponding PE is 15.39/13.26/11.50 times, adjusted to a “buy” rating.
Risk warning: declining market demand, rebound in panel prices, and fluctuations in the RMB exchange rate.