Incident reviews

On November 17, 2023, the company issued the “Plan for Issuance of Convertible Corporate Bonds to Unspecified Targets”. According to the announcement, the total capital raised for the issuance of convertible corporate bonds to unspecified targets does not exceed RMB 589.2093 million (including the principal amount). After deducting issuance costs, it is proposed to invest in: intelligent manufacturing base construction projects, Abbison (Huizhou) R&D center projects, and global market development and marketing service network construction projects.

The intelligent manufacturing base construction project increases production capacity and production automation levels, and reduces production costs. The intelligent manufacturing base construction project establishes automated production lines through the purchase of advanced production equipment at home and abroad, and performs information-based integrated control and management of various production processes through intelligent design software to further enhance the company's existing production capacity, enhance the level of automation, intelligence and informatization of the company's manufacturing and warehousing, achieve an overall solution integrating intelligent technology empowerment, data thinking, and application of information technology, improve the company's production and operation efficiency, and improve the degree of automation and flexible production of production processes, reduce labor consumption, reduce production costs, and improve product consistency and stability , thereby enhancing the competitiveness and profit level of enterprises. The total investment in the intelligent manufacturing base construction project is 261.4418 million yuan, and 96,500 square meters of LED display production capacity will be added after delivery.

The construction of the Abbison (Huizhou) R&D center project is conducive to enhancing product innovation and software support R&D capabilities. In recent years, the LED display industry has shown characteristics such as high equipment requirements, rapid technological change, and diversification of downstream application fields. Higher requirements are placed on the display life, contrast, resolution, response speed, viewing angle effect, color, brightness, and power consumption of LED displays. As one of the carriers of information display and data visualization, LED displays can be widely used in security, traffic, hospital and other monitoring centers, emergency command centers and command and dispatch centers, and application scenarios such as XR and home theaters. Continued progress in LED display technology plays a key role in the penetration of LED displays in various application scenarios. Therefore, in the face of diversified needs in the future, the company needs to continue to invest in R&D in the field of technology, improve the visual experience and level of intelligence of products, and accelerate the application of the company's products in more application scenarios. In the R&D center project, Abison will further strengthen products such as LED home theater audio and video systems, XR virtual shooting system research, platform control system software, Android broadcast control system software, large screen scene simulation systems, COB/MIP optics and visual effects research, etc., and their system-level R&D to continue to expand its comprehensive capabilities in intelligent display, intelligent control, product quality and effect, and its core competitive advantage in LED display product innovation and upgrade capabilities.

Global market expansion and marketing service network construction, promote domestic and foreign market expansion, and help the company expand its business. Abison plans to establish and upgrade marketing service outlets in 15 cities at home and abroad, including Beijing, Shanghai, New York, and London. Abison adheres to the global operation of its own brands. Through the dual driving model of direct sales and distribution, Abison has established an efficient and unobstructed international and domestic sales channel network and consolidated the company's channel barriers. In the global LED display market, mainland Chinese companies occupy a dominant position in the LED display market. According to statistics from Jibang Consulting, in 2022, the company's global LED display market share was 5.7%, ranking 6th; it is expected that in 2023, the company's global LED display market share will rise to 6.8%, ranking 5th. According to statistics from Jibang Consulting, the global LED display market continued to grow in 2022 and 2023. Among them, the total LED display market reached 7.564 billion US dollars in 2023, an increase of 7.86% over the previous year. The global market size is expected to reach 10.921 billion US dollars by 2025. According to GGII, the global Mini LED market will reach 5.3 billion US dollars in 2025, with a compound annual growth rate of more than 85%.

Investment suggestions: We forecast that the company's operating income from 2023 to 2025 will be 38.24/51.15/6480 billion yuan, with growth rates of 36.8%/33.8%/26.7%, respectively; net profit of 3.27/4.31/568 billion yuan, respectively; growth rates of 60.9%/31.8%/31.9% respectively; corresponding PE 16.7/12.7/9.6 respectively. Considering that Abbison is one of the companies with the most comprehensive range of LED display product segments in the world and can provide customers around the world with rich product choices, the superposition company's brands have a high reputation and reputation in the global LED display field, and have a high position in many market segments. As the construction of the fund-raising project is completed and the pre-set goals are gradually achieved, the company's operating scale and profitability will be further improved, and market share is expected to increase. First coverage, and buy-A recommendations will be given.

Risk warning: downstream demand falls short of expectations; new technology/product/project progress falls short of expectations; risks arising from exchange rate fluctuations; risks arising from developments in LED display technology.