LED drives power supply leaders, and innovation drives seizing new fields. Established in September 2007, Infinite is mainly engaged in R&D, production and sales of LED driving power supplies. It covers a full range of products, has passed certification in many countries around the world, and is committed to providing customized solutions. It has now become the world's leading supplier of LED driving power supplies. Under the leadership of the founder and chairman Dr. Guichao Hua, the company insists on independent innovation. In recent years, the company has continuously expanded emerging LED lighting markets such as plant lighting, sports lighting, UV LED, etc., to firmly grasp the leading position in the industry with differentiated products.
Global layout, products recognized by domestic and foreign customers. The company's products are sold to more than 80 countries and regions around the world, including North America and Europe, and overseas sales accounted for about 50% in 2020. The mainland production base is located in Tonglu, with a total of 13 production lines, 1,000+ production personnel, and a maximum monthly production capacity of 1 million+ units. Overseas factories were set up in India and Mexico, with the Indian factory mass-produced in February 2020. On the one hand, it was used as a backup for domestic production capacity in situations such as the closure of the country due to the epidemic. Furthermore, India and surrounding markets have a large population. Infrastructure construction has been rapid in recent years, driving power potential is huge. India's tariffs are high, and local production reduces tariff pressure.
The Mexican factory has been able to ship in small batches in 20 years. In the context of increased trade frictions and tariffs, setting up a factory in Mexico to form localized support for North American customers will provide strong support for the company's future overseas business. In addition, the company has also set up distribution centers in Europe and North America, respectively.
The legalization of industrial hemp continues to advance globally and in North America, and demand for plant lighting is exploding. Industrial hemp cultivation was legalized at the US federal level in late 2018. Legal cultivation of industrial hemp in the US surged to 453,000 acres in 2019, an increase of 479% over the previous year. At the end of 2020, the UN officially recognized the medical value of marijuana, further accelerating the global medical marijuana legalization process. In 2020, the US legal marijuana market space was nearly 18 billion US dollars (the largest market in the world), with a year-on-year growth rate of at least 50%. It is expected that CAGR will remain around 20% in the next 10 years, and the market space is expected to reach 100 billion US dollars by 2030. According to our estimates, global demand for LED lighting for plant lighting was 3.2 billion US dollars in 2021, reaching 7 billion US dollars by 2026.
Entering the charging and switching of new energy vehicles and reaching a new level of growth. Relying on its technical advantages in the field of driving power supplies, the company has entered power battery charging, replacement and storage products for new energy vehicles. Currently, it has launched a series of products such as on-board OBC, DCDC converters, power exchange station chargers, power battery balancers, etc., forming a new business growth point, and is expected to fully benefit from the growth in demand in the NEV market in the future.
Profit forecasts and investment suggestions: According to our estimates, the global market demand for plant lighting drives was 800 million US dollars in 2021, reaching 2.2 billion US dollars in 2026, and CAGR 21.6%. As a leading LED driving power source, Infinite has forward-looking layout of LED driving power supplies for plant lighting, taking the lead in benefiting from the explosion in market demand and the rapid expansion of plant lighting business. The company's core competitiveness in the field of plant lighting lies in ① being good at medium- and high-power products required for plant lighting; ② global layout, accounting for nearly 50% of overseas market business; ③ a full range of product categories, many certifications worldwide, strong product reliability, high brand recognition, customization capabilities, and great customer stickiness. ④ Teaming up with plant lighting solution provider Agrify and Quad Ecosystems to extend the industrial chain and create a one-stop service. Furthermore, the company relied on the advantages of driving power supply technology to enter the charging and switching field of new energy vehicles, opening up new growth points. We expect the company to achieve revenue of 1,473/2143/2,774 million yuan in 2021-2023, with net profit of 243/354/476 million yuan, corresponding to the current valuation of 26.4/18.1/13.5x, the first coverage, and a “buy” rating.
Risk warning: Downstream demand falls short of expectations, and industry competition intensifies.