Events:

1. The company announced its 2020 annual report that its revenue in 2020 was 3.124 billion yuan, down 13.06 percent from the same period last year; the net profit of returning to its mother was 93 million yuan, up 110.59 percent from the same period last year; and the net profit of non-returning parents was 54 million yuan, up 106.66 percent from the same period last year. 2020Q4's single-quarter revenue was 1.017 billion yuan, an increase of 11.77% over the same period last year and 30.89% over the same period last year; the net profit from home was 30 million yuan, up 119.28% from the same period last year and 25.00% from the same period last year; deducting the non-return net profit from 17 million yuan, an increase of 114.29% from the previous quarter. 2. 2021Q1 achieved revenue of 856 million yuan, an increase of 47.42% over the same period last year. The net profit was 61 million yuan, an increase of 469.72% over the same period last year and 103.33% over the previous year, while the net profit after deducting non-return was 55 million yuan, up 1302.63% from the same period last year and 223.53% from the previous year.

The management effect is gradually reflected, and the asset profitability has improved significantly: the company's 2020 return net profit increased significantly compared with the same period last year, on the one hand, due to the good control of production costs and expenses, on the other hand, there was no impairment of goodwill in 2020. In terms of period expenses, sales expenses, management expenses and financial expenses decreased by 21.60%, 13.04% and 64.22%, respectively, compared with the same period last year. The sharp reduction in financial expenses is mainly due to the reduction of the scale of loans, the reduction of interest expenses, the improvement of the efficiency and income of the use of funds, and the reduction of exchange losses. The impairment loss of assets was 96 million yuan, which was significantly lower than that of 943 million yuan in the same period last year, mainly due to the gradual elimination of the impact of goodwill impairment of subsidiaries such as Suiyi, Gold, Yishan, and so on. From the single quarter of 21Q1, Q1 gross profit margin is 23.26%, up 5.35pct from the same period last year, 1.21pct month-on-month increase, 6.96% net profit rate, 5.11pct year-on-year increase, 4.55pct month-on-month increase, significant increase in gross profit margin and net profit margin, and significant improvement in profitability.

Traditional packaging business volume and price rise, card position Mini led cut into the blue ocean: in traditional packaging, thanks to the continuous warming of the LED industry and the expansion of Guangzhou line production capacity, the company's traditional white light packaging business ushered in a rise in volume and price, which is expected to increase the company's market share in the field of LED packaging. In terms of automotive lighting, the company followed the footsteps of the global first-line automotive LED brands such as OSRAM, Lumileds, Nichia, etc., officially launched a series of high-power Ceramic products at the end of 2020, completed the mass production of the mainstream automotive LED packaging product types in the automobile front-loading market and the comprehensive coverage of the whole vehicle LED application, and became the first mainstream automotive LED packaging national brand in the whole line of mass production. In terms of Mini LED, the company is actively promoting the construction of the Mini LED project., Mini LED shows that the first phase of the project has been put into production and the second phase has started construction. The release of new capacity will drive the company's profitability to improve steadily.

Lighting demand recovery trend to strengthen the, Mini LED market volume is expected: in LED lighting, the downstream demand for LED lighting recovered rapidly in the second half of 2020. For the whole of 2020, the cumulative export volume of China's lighting industry was 52.588 billion US dollars, an increase of 15.7% over the same period last year. Among them, the cumulative export value of LED lighting products was 35.594 billion US dollars, an increase of 17.9% over the same period last year, the largest increase since 2016. The overall export of lighting has picked up obviously. In terms of Mini LED, LEDinside predicts that the, Mini LED market will develop rapidly in the next few years. The global Mini LED output value will reach 1 billion US dollars in 2023 and the Micro LED market output value will reach 2.891 billion US dollars in 2025. Mini LED not only inherits the characteristics of traditional seamless splicing with small spacing, wide color gamut, low power consumption and long life, but also has the advantages of high protection, large visual angle, high PPI, high brightness and contrast. In addition, panel factory and machine factory accelerate the introduction of MiniLED products, BOE has layout in backlight and direct display applications, it has relevant glass-based MiniLED backlight production technology reserve and imports display and TV, VR products; in the field of Mini-LED display, BOE has also completed the development of glass-based oversized splicing technology. With the rapid expansion of Mini LED backlit TV and other terminal products, downstream applications are expected to accelerate the expansion of production capacity of mid-stream Mini LED packaging manufacturers, and the company is expected to usher in an explosive period of performance.

Maintain the "overweight" rating: optimistic about the leading layout of the company in Mini LED packaging, with the volume of downstream Mini LED applications, it is expected to significantly improve the company's performance. It is estimated that the company's 2021-2023 return net profit is 371 million yuan, 474 million yuan, 564 million yuan, EPS is 0.52,0.67 yuan, 0.80 yuan, corresponding to PE is 20.37X, 15.96X, 13.40X respectively.

Risk Tip: LED package price reduction is higher than expected, technology progress is not as expected, Mini LED demand is not as expected, capacity release is not as expected.