Description of the event
On August 22, Qianzhao Optoelectronics announced the “2024 Semi-Annual Report of Xiamen Qianzhao Optoelectronics Co., Ltd.”. During the reporting period, the company's revenue reached 1.272 billion yuan, +10% year over year; of these, main business revenue was 0.947 billion yuan, +25.87% year over year, and main gross margin was +8.5 pct year over year; net profit to mother was 36.8196 million yuan, +134.16% year over year.
Incident comments
Quality leads structural upgrading, and the main LED industry continues to improve. On August 22, Qianzhao Optoelectronics announced its 2024 interim report. During the reporting period, the company's revenue reached 1.272 billion yuan, +10%; of these, the main business revenue was 0.947 billion yuan, +25.87% year over year, and the main gross margin was +8.5 pct year on year; realized net profit to mother was 36.8196 million yuan, +134.16% year over year.
It is worth noting that 2024H1's capacity utilization rate reached 97.39%, up 23.46pct year on year; the revenue share of the company's middle and high-end products continued to increase, +6pct year on year. Through internal R&D and external cooperation, the company continuously upgraded its products. 2024H1 RGB directly showed a 38% year-on-year increase in overall revenue. Among them, Mini RGB products contributed greatly to performance growth, and revenue increased 249% year-on-year. In the field of lighting, as the product structure was upgraded and revenue achieved steady growth, various high-efficiency products were recognized by customers and large-scale production and shipment were achieved. Revenue from high-efficiency lighting products increased by more than 30% over the same period last year.
Driven by increased capacity utilization and product structure upgrades, the company's overall profitability improved in 2024 Q2, with gross margin of 15.32%, +1.33pct month-on-month, +5.71pct; 2024Q2 net margin reached 5.94%, +6.95pct month-on-month, +6.76pct year-on-year; and the number of inventory turnover days for the 2024Q2 company was 79.99 days, -9.93% month-on-month and -5.07% year-on-year.
New display technology & customer linkage, mini/micro-LED forms a long-term growth channel. In the field of backlight products, with the resource support of controlling shareholders and the company's new technology research and development, the company's mini-LED backlight chip products have achieved major breakthroughs in technology and customers. The 2024H1 has been successfully introduced into leading TV manufacturers. The 2024H1 backlight chip revenue increased 178% year-on-year, and the mini-LED backlight product line will become an important direction for the company's future development. Micro-LED companies continue to deeply cultivate technology, continue to promote glass-based micro LED products with domestic customers, and produce and supply them in small batches. At the same time, the product yield has reached 99.99% in terms of large-scale transfers, and progress is impressive. In the future, as the mini/micro-LED industry continues to develop and the penetration rate continues to increase, the new display business is expected to promote the company's overall business upgrade and continuous business growth.
Commercial space is on the rise, and there is plenty of space for gallium arsenide solar cell epitaxial wafers. Commercial space development continues to advance, and the number of low-orbit satellite launches is expected to continue to rise, driving the company's 2024H1 gallium arsenide solar cell epitaxial wafer product shipments to increase 39% year-on-year. At the same time, the company's newly developed flexible thin-film battery epitaxial film products have been delivered in large quantities. The CPV performance of condenser bandgap matching three-junction batteries has been continuously improved, and they are already being used in customers' concentrated photovoltaic new energy projects. In the future, the company is expected to gradually continue to develop as a core supplier of terrestrial and space energy solutions, and achieve rapid growth at an accelerated pace.
We expect the company's net profit to reach 0.125, 0.205, and 0.324 billion yuan in 2024-2026, corresponding PE is 44X, 27X, and 17X, maintaining a “buy” rating.
Risk warning
1. The risk that LED downstream demand falls short of expectations;
2. The risk that the development progress of the satellite Internet industry falls short of expectations.