The world's leading stage lighting company with a rich brand matrix. The company was founded in 2005 and focuses on the production and development of professional stage lighting, cultural tourism landscape and architectural art lighting, UV disinfection products, stage trusses and other technological products. Domestic sales are sold through the brand TERBLY; export sales enter the European and American markets through the ODM model, and the overseas high-end brand “AYRTON” is acquired to enter the brand market. Currently, the company has many well-known domestic and international brands such as TERBLY (independent lighting brand), AYRTON (international entertainment lighting brand), GSARC (architectural lighting brand), GOLDENSEA UV (ultraviolet disinfection brand), and WTC (intelligent construction truss), etc., and the brand matrix is complete.

The share of independent brands has increased, and the profit structure continues to be optimized. In 2017-2023, the company's revenue CAGR was 14.5%, net profit CAGR to mother was 38.4%, and the ODM/OBM share changed from 58.4%/30.5% to 32.9%/63.1%. In 2017, the company acquired Arden wholly-owned. With the manufacturing+brand synergy between the two parties, Arden accelerated product iteration (GHIBLI launched in 2017, KHAMSIN launched in 2019), and sales grew rapidly (the share of Arden product sales increased from 10.5% to 23.5% in 17-19). Benefiting from the increase in the proportion of independent brands & high-margin products (new products have higher gross profit), the company's profit center has risen.

Industry expansion and pattern optimization. 1) Demand side: The downstream performance and entertainment industry has high demand for iterative lighting equipment, and lighting equipment usually accounts for a lower proportion of performance costs, so downstream price sensitivity is weak. Benefiting from rapid downstream recovery and the increase in average prices driven by the iteration of new products, the scale of lighting equipment has grown excellently. 2) Supply side:

The industry pattern is scattered, but in recent years, overseas mergers and acquisitions have been frequent, domestic technical barriers have deepened, and Chinese enterprises have gone overseas to seize share, and the pattern continues to be optimized.

Technology & R&D are the cornerstone of development, OEM & brand two-wheel drive. 1) Product side: Benefiting from continuous investment on the R&D side, the company has deep technology accumulation (patent accumulation is significantly superior to peers; core technology products accounted for 90% of main business revenue in 2019), and product iteration has accelerated. 2) On the sales side, ODM core customer cooperation history spans 10 years+, and continues to increase supply share by providing supporting products & services (sales accessories, trusses); after OBM acquired Arden, the synergetic advantage was evident. The average price of Arden increased from 0.0144 million yuan to 0.0259 million yuan in 2017-2019, driving the company's overall average price from 0.0105 million yuan to 0.0161 million yuan. 3) Productivity side:

The company's production capacity utilization rate is close to saturation, with an output of 0.0879 million units in 2023. The performing arts lighting equipment production base upgrade and expansion project (adding 0.03 million units) and the second phase expansion project (adding 0.04 million units) will be put into operation at the end of 2026/2025, respectively. The company's growth ceiling is expected to rise at that time.

Profit forecast: In 2024-2026, the company's net profit to mother is expected to be 0.45, 0.55, and 0.68 billion yuan, respectively, and the corresponding PE is 11.2X, 9.1X, and 7.5X, respectively. Dafeng Industrial, Fengshang Culture, and Fengyuzhu in the same industry were selected as comparable companies. The average valuation of comparable companies in 2024 was 16.6X, covered for the first time, and given a “buy” rating.

Risk warning: The improvement in global demand falls short of expectations, the increase in capacity utilization falls short of expectations, and the risk of global trade friction is increasing.