Investment logic
Veteran LED display screen-packaging enterprises, strengthen technology research and development, internal management, business development, and actively improve profitability. The proportion of LED display products in the company's revenue from 2018 to 2020 has increased from 40.50% to 58.33%, which has gradually become the company's core business. With the stabilization of the epidemic and the resumption of sports events and commercial performances, the demand for LED displays has recovered. in the first half of 2021, the company expects profits of 1800 to 23 million yuan, an increase of 217.6 percent to 305.8 percent over the same period last year, of which the profit for the second quarter is 1410 to 19.1 million yuan, compared with 650000 yuan for the same period last year. Profitability is greatly improved, and profitability is expected to be further improved in the future.
8K+5G brings new opportunities, small spacing LED demand ushered in a new round of rapid growth. In 2020, although affected by the epidemic, the sales of small spacing LED in China reached 11.8 billion yuan, an increase of 14.0% over the same period last year.
TrendForce predicts that the global compound annual growth rate of small-spaced LED displays will be 27% from 20202 to 2024, of which P1.6, P1.2 and products with smaller spacing lower than P1.1, especially those below P1.1, are predicted to achieve a compound annual growth rate of 50% between 2020 and 2024, bringing new development opportunities, which will promote a new round of rapid growth of narrow-spaced LED.
Lehman ploughed COB packaging technology and ushered in new opportunities for Mini/Micro LED development. The company has been engaged in COB packaging technology for many years, and has independently developed and mass-produced Mini/Micro LED ultra-high definition display products including 1.9-0.6mm and other Mini/Micro LED ultra-high definition display products using COB integrated packaging technology and pixel engine technology. Including LEDHUB intelligent conference system, intelligent lighting, LED creative display, etc., and has been well applied in many fields, such as security, monitoring, education, command, broadcasting, commerce, conference, exhibition, data center and so on. COB packaging technology has obvious advantages under P1.0mm. With the rapid development of Mini/Micro LED, the company is expected to benefit actively. In the first half of 2020, Lehman had an absolute market advantage of 30.56% of the market share of small-spaced COB products. In 2020, the company's Mini/Micro LED ultra-high definition display business revenue based on COB technology increased by 47% over the same period last year, of which the domestic market grew by 62% over the same period last year. In 2021, Q1 continued to maintain a high growth trend, with an increase of 130% over the same period last year, of which the domestic market grew by 187% over the same period last year, with a significant increase in domestic share and full export orders.
Investment suggestion
It is estimated that the return net profit of the company from 2021 to 2023 is 0.85, 0.85, 0.13 million yuan, and the EPS is 0.24, 0.53, 0.89 yuan, corresponding to PE37/17/10 times. Give the company a 30-fold valuation in 2022 with a target price of 15.96 yuan and a "buy" rating.
Risk
The risk of Mini/Micro LED promotion falling short of expectations; the risk of repeated global epidemics leading to lower-than-expected demand; the risk of rising raw material prices leading to higher operating costs; the risk of lifting the ban on restricted shares