Domestic leader in LED chip design and R & D, expanding production of Mini LED chips to boost growth
Jucan Optoelectronics focuses on the R & D, production and sales of GaN-based high-brightness LED wafers and LED chips, with a compound revenue growth rate of 38% from 2018 to 2022. The company maintains a refined business strategy, inventory and accounts receivable indicators are better than the industry average, and actively layout new areas of Mini/Micro LED chips, which can be widely used in vehicle display, super-large display and new display markets such as AR and wearable devices. At present, the company has mastered the core technology of high-brightness LED epitaxy and chip manufacturing, and has achieved double promotion in two aspects of product yield and performance, and the high-end LED is at the domestic first-line level. We expect that in 2023-24-25, the company will achieve revenue of 24.6 24PS 28.67 RMB 3.349 million, with reference to 2.5x 24PS of the comparable company, considering that the company has been in a leading position in the industry, and the company's production capacity is gradually expanding to realize the scale effect, with a target price of 14.5 yuan and a "buy" rating for the first time.
Technology + application dual-drive industry ushered in a new cycle, the company's strategic layout in the field of high-end LED chips
The steady growth of the market scale of the LED chip industry (global CAGR=13% 23-28) is mainly driven by the demand for new products, and the market concentration is high (85% of the global market share according to the production capacity CR6 in 21 years). Technology and efficiency have become the core advantages of manufacturers' competition. In recent years, car lighting, mobile phone backlight, Mini/MicroLED and other segments have become the driving force for the future growth of the LED chip market. At the same time, the decline of Mini LED prices and the growth of application space form a virtuous circle, and domestic and foreign demand has entered a climbing period. According to Arizton data, the size of China's Mini LED market is expected to grow to 43.1 billion yuan in 2026, with a 21-26 market growth rate of CAGR=34%. Jucan actively laid out the high-end LED chip represented by Mini LED, and launched Mini LED for local light control, which was fully recognized by users.
Capacity release is expected to boost revenue growth, reduce cost control fees and enhance profitability
The company's Suqian production base has an annual production capacity of nearly 24 million pieces, ranking in the forefront of a single production base in the same industry. And thanks to the reasonable planning of the company to reserve space for the next round of new production expansion, capital construction costs have been greatly reduced, further releasing economies of scale. At the beginning of 2023, the company has obtained the administrative license of the CSRC on the "Mini/MicroLED chip R & D and manufacturing expansion project". In the future, the company's high-end production capacity will continue to be released and the product category will be further enriched. At the same time, the company's meticulous management helps to reduce cost control fees, the expense rate is lower than the industry average, inventory turnover days and other indicators are better, demonstrating the company's profitability.
Investment advice: the first coverage to give a "buy" rating, the target price of 14.5 yuan Mini/Micro LED, car lighting, plant lighting and other new technologies and applications to promote the industry to usher in a new cycle. The company continues to expand product layout, strategic layout of high-end LED field to optimize product structure, while increasing research and development to achieve product yield and performance two-way promotion. We expect that in 2023-24-25, the company will achieve revenue of 24.6 24PS 28.67 RMB 3.349 million, with reference to 2.5x 24PS of comparable companies, considering that the company has been in a leading position in the industry, and the company's production capacity is gradually expanding, scale effect is gradually realized, and the company is given a "buy" rating for the first time.
Risk hint: market competition intensifies, capacity release falls short of expectations, and R & D progress falls short of expectations.