Deep ploughing video image display control field, new products to achieve rapid volume: the company was founded in 2012, with video processing algorithm as the core, hardware equipment as the carrier, to provide LED display display control system for manufacturers, and gradually expand the product matrix to the video processing and playback field, new products to achieve rapid volume. The company has a sound operation and obvious resilience under the disturbance of the epidemic, and the post-epidemic cycle is expected to accelerate: 2022Q1-Q3 revenue increased by 11.6% compared with the same period last year, and its net profit increased by 20.5% over the same period last year, significantly higher than the growth rate of the industry. With the optimization of epidemic prevention and control policies, greater growth flexibility is expected.
The vigorous development of the LED industry has led to the expansion of the demand for display control systems: (1) the popularity of 5G+8K applications has led to a growth rate of about 40% in the ultra-high definition video industry; (2) small spacing LED technology iteration, the continuous improvement of definition brings the expansion of application scenarios; (3) LED technology is mature, the advantage of scale is highlighted, and the gradual decline in panel prices promotes the popularity of LED applications. (4) Ultra-high definition promotes the upgrading of software technology, and the products have room for price increase. With the ultra-high definition of 2K to 8K video, the doubling of the number of LED pixels leads to the growth of the business volume of the display control system; the demand for ultra-high definition of video promotes the upgrading of technology, and the value of each product is expected to increase.
In the middle reaches of the ultra-high definition video industry, the market share of video processing equipment continues to rise: the company's traditional display control system card industry reaches 12% of the domestic market share, forming a duopoly with Nova Nebula (39% market share). Through the extension of technology, the company realizes 8K video processing technology to overtake at the corner, opens a broad space for domestic alternatives, integrates the transmitter into the video processing equipment, and relies on the customer stickiness of the display control system to achieve the rapid introduction of new products and the rapid increase in market share.
The product matrix continues to expand, accelerating the global market layout: based on the LED display control system, the product matrix is gradually expanding, and the follow-up is expected to create a full line matrix of video equipment. The company's products are mainly standardized, and after being recognized by major customers, the brand advantage will be gradually established, which will help to speed up the promotion of new products.
At the same time, strengthen marketing services, build overseas localized marketing, and actively expand overseas markets.
Investment suggestion: domestic video image display control leader, card position in the middle reaches of the LED industry, by virtue of video processing technology corner overtaking, to achieve rapid volume of new product video processing equipment. We predict that the company will achieve income of 6.83,9.77 and 1.393 billion yuan from 2022 to 2024, and realize net profit of 1.33,2.35 and 328 million yuan, corresponding to PE of 56x, 32x and 23x, covering for the first time and giving "overweight" rating.
Risk hint: technology landing progress is not as expected; key customer expansion is not as expected; government expenditure is not as expected.