Main points of investment
Fifteen years of sharpening a sword, small and medium-sized panel differentiation product advocate: Longteng Optoelectronics was founded in 2005, deeply ploughed small and medium-sized display panel for 15 years, landed on Kechuang board in August 2020. The company has a certain global market share in the field of terminal applications such as notebook computers, smart phones and cars, and has a certain comparative advantage in the field of small and medium-sized display panels. The company has a small production capacity in the industry, with only a fifth-generation a-SiTFT-LCD production line, but it relies on efficient production line operation and flexible product portfolio, using differentiated high value-added technologies such as HVA wide and narrow perspective anti-peeping, metal grid On-cell touch technology to improve the added value of products, maintaining a good profitability, and obvious differentiation advantages. The company's initial public offering raised 1.5 billion yuan for IGZO technical transformation project construction, enrich product form, firm differentiation competition strategy.
Core business consumption shows that it provides strong performance support in the short term: the company's main source of income is consumer display products, including laptop panels and mobile phone panels, of which pen panels accounted for 55.2% of the main business income in 2019, mainly due to the company's strategic adjustment. In the context of increased competition and slowing demand in the smartphone industry, the company accurately grasps the industry trend and adjusts its business focus to higher-value laptop panels. Since April 2020, the demand for IT panels has surged under the catalysis of the epidemic, and the current demand side remains high, and the shortage of overlay display driver chips 2021H1 is expected to remain in short supply, thus benefiting the company's core business. Although the demand for mobile phone panel is slowing down due to the decline in mobile phone shipments year by year, 5G is expected to drive a new round of demand. In order to balance the contradiction between rapidly declining prices and sharply increased costs, a-Si has become the choice of screen configuration for middle and low-end products, and a-Si panel prices have increased slightly and continued to the present. Laptop and mobile phone panel business provide a strong support for the company's short-term performance.
Under the trend of electric intelligence, vehicle industrial control has become a long-term focus: the proportion of the company's vehicle and industrial control panel business has increased year by year, from 13.3% in 2017 to 17.0% in 2019, while vehicle and industrial control have also become growth areas that conform to the general trend. Driven by the rapid development of new energy vehicles, the "four modernizations" make the on-board display become an important human-computer interaction center in the vehicle, and the large screen and multi-connected screen put forward higher requirements for the quality and quantity of the on-board display. Global shipments of front-mounted panels are expected to usher in an inflection point in 2021 and return to positive growth. under the trend of electric intelligence, the development of vehicle panels has entered a new era. The industrial control field also follows the trend of intelligence, visualization and interaction, the display panel has become the core port to achieve interaction, and a wide range of application scenarios such as medical, industrial, smart home and commercial projects are blooming. Therefore, vehicle and industrial control have become the next blue ocean for the development of small and medium-sized panels, preparing for future transformation and development.
Investment advice: we predict that the company's earnings per share from 2020 to 2022 will be 0.08, 0.08 and 0.09 yuan respectively, an increase of 6.5%, 5.7% and 3.1% over the same period last year, and the return on equity is 6.9%, 6.8% and 6.5%, respectively.
The PE of the company from 2020 to 2022 is 89.2,84.4 and 81.9 times respectively, and the industry average is 32.6,19.7 and 15.6 times. Combined with the valuation level and fundamentals, the neutral-B recommendation is given for the first time.
Risk tip: some panel manufacturers switch to pen electric panels leading to supply and demand imbalance; smartphone panel a-Si is accelerated replacement; vehicle and industrial control panel demand growth is not as expected; new capacity release, panel prices fall back; driver chip shortage leads to cost increase and effective shipment reduction; the company's technical renovation project progress is not as expected; new technology research and development lagging behind market demand leads to a decline in market share.