occurrences

On October 12, the company released its report for the third quarter of 2024. During the reporting period, the company's revenue reached 1.88 billion yuan, an increase of 2.26% year on year, and net profit attributable to shareholders of listed companies was 0.05 billion yuan, an increase of 155.95% year on year.

Key points of investment

The display field continues to lead the market. The company continues to focus on traditional LED high-end display market cultivation. Relying on display chip technology accumulated over many years and continuous technological innovation, the company has launched indoor and outdoor display products with high light efficiency and excellent reliability, which has steadily increased the company's share in this market.

In the field of lighting, product structure optimization. The company focuses on improving quantum efficiency outside the chip. Through processes such as transparent conductive layer optimization and epitaxial surface roughening, the light extraction efficiency of the chip has been significantly improved, and the brightness of lighting products has been improved comprehensively.

Backlight products continue to break through. The company has made a major breakthrough in backlight products, and the performance of the products has reached the leading level in the industry. On the Mini POB side, a high-density passivation layer five-layer coating process has been introduced to comprehensively improve the chip's waterproof ability; in the Mini COB, a double DBR dimming process has been developed to enable the chip's light emission angle to be adjusted, improving the visual efficiency level of the application side; in terms of traditional backlighting, an epitaxial structure suitable for high-power flip chips has been developed, making the chip EOS capability at the leading level in the industry. Various chips have been certified by domestic and foreign customers, and batch supply has begun.

Automotive products continue to be introduced. The company has obtained the IATF16949 automotive industry quality management system certification. Its automotive product line covers a full range of 0.2W to 5W, and is widely used in various automotive scenarios, from interior atmosphere lights to headlights outside the car. All products are developed in strict accordance with AECQ102 standards, have undergone strict testing, are of excellent quality, have been widely recognized by domestic and foreign customers, and have been mass-produced.

Plant lighting is booming. With the intensification of extreme climate and the rise of urban agriculture, indoor planting is developing rapidly, and LEDs have gradually replaced traditional mercury lamps as a new generation of plant lighting sources with advantages such as high light efficiency, energy efficiency, and long life. The company has developed plant lighting chips that meet different application scenarios, including 660nm UR band chips that match the requirements of the photosynthetic red zone: 10-20mil, power 0.1-0.5W chips, and 45-75mil, power 1-2 W chips; 730nm FR band chips that meet the chlorophyll absorption red zone requirements of plants: 10-26mil, power 0.1-0.6W chips.

Solar cells have benefited from the development of the commercial aerospace industry. The number of low-orbit satellite launches is expected to continue to rise, and demand for the company's products is strong. The company's newly developed flexible thin-film battery epitaxial sheet products have been delivered in large quantities, and the CPV performance of condenser bandgap matching three-junction batteries has been continuously improved, and they have already been used in customers' concentrated photovoltaic new energy projects.

Profit forecasting

We expect the company to achieve operating income of 2.6/3/3.5 billion yuan and net profit to mother of 0.07/0.15/0.27 billion yuan in 2024/2025/2026, respectively. The current stock price corresponding to 2024-2026 PE is 124/60/34 times, respectively, covered for the first time, giving it a “buy” rating.

Risk warning

Market competition risk, chip price reduction risk, product technology update risk, human resources risk.