We are deeply involved in the lighting industry and have both product+channel advantages. OPP Lighting was founded in 1996. It started with energy-saving lamps, went through diversified product development, and gradually established its own production, marketing and research system. It is a leading enterprise in the domestic lighting industry. On the product side, the company focuses on the production of household lighting, commercial lighting, light sources and control products, and is gradually transforming into a comprehensive lighting system solution service provider. On the channel side, relying on years of accumulated advantages, the company has achieved a comprehensive layout of online+offline, domestic+overseas. The company's shareholding structure is concentrated. The actual controller has been in the lighting industry for 20+ years and has learning experience in business administration. Other management also has relevant work experience in various fields such as home appliances.

The lighting industry has broad space, and the trend of intelligent lighting and LED penetration in industry and commerce is prominent. With the improvement of LED lighting technology and falling prices, the global LED lighting market continues to expand. The global LED lighting market size in 2021 was US$153.5 billion, and is expected to grow to US$275 billion in 2027; the market size of China's LED lighting industry may reach 416 billion yuan in 2023. 1) Supply and demand sides: On the demand side, global lighting market demand is concentrated, with China, Europe, and North America accounting for more than 60% of the global LED lighting market; on the supply side, China's LED supply chain is strong, and exports to emerging economies have prospects. 2) Product attributes: Although the overall growth rate of the domestic household lighting industry has slowed down in recent years, there is still no shortage of structural highlights. The penetration rate has increased rapidly from only 2.0% in 2016 to 20.4% in 2022. Subsequent factors such as cost reduction in upstream core raw materials, midstream integrated solutions, and downstream expansion of B-side applications are expected to further open up space. 3) Application areas: In recent years, emerging market segments such as industrial lighting and landscape lighting have emerged, and the industry space is large - in terms of commercial lighting, the global LED commercial lighting scale was about 156 billion in 2019, and the energy efficiency and cost performance advantages of LED commercial lighting are expected to help penetrate; in terms of industrial lighting, the Chinese/foreign market size is about 700/250 billion yuan, and intelligent industrial lighting is expected to increase value as digital factories continue to advance.

Op Jiazhao's leading position has been consolidated, platformization+digitalization has achieved lean operation, and commercialization+overseas business has brought growth. Facing fierce competition in the domestic household lighting market, OPP is working simultaneously through channels and products to consolidate its leading position and lead the industry in revenue. At the same time, the company achieved intelligent exploration through research and development. In 2022, OPP's sales scale of smart lighting products in the domestic household market was 7-10 billion, which is the first tier of the industry. Furthermore, through the layout of commercial licenses, the company has achieved expansion in application fields and launched several benchmark projects; promoted product marketing, focused on key market development, and continued optimization of channel layout, which is expected to build long-term growth momentum. At the same time, the company actively seeks benefits from within, consolidates and enhances product competitiveness and channel efficiency through a series of tasks such as product platformization, digital transformation, and channel optimization, and continues to explore its own profitability.

Investment advice: As a leading domestic home lighting company, OPP has long been deeply involved in the construction of diversified domestic channels, consolidated product competitiveness, and continued to lead the market in scale. The company seizes the opportunity of industry intelligence to quickly enter, upgrade products and solutions, optimize store image and experience, and cultivate channel efficiency and long-term development strength. At the same time, the company is actively expanding product application areas and sales markets, accumulating rich experience in industry lighting solutions and project services in the commercial licensing field, and focusing on key overseas markets for channel layout, which is expected to create multiple growth curves. The company's net profit for 23-25 is estimated to be 9.2/10.3/1.16 billion yuan. Combined with comparable companies looking at 15.1x in '25, the target price is 23.4 yuan/share, corresponding to the closing price of 38.7% space on 2024/4/23. It was covered for the first time, giving it a “buy” rating.

Risk warning: Profit improvements driven by platformization fall short of expectations; risk of fluctuations in raw material prices; risk of exchange rate fluctuations; technology research and development falling short of expectations; increased industry competition; risk of fluctuations in the real estate industry.