\u3000\u3000 Toread Holdings Group Co.Ltd(300005) (300005)
China’s largest outdoor products enterprise, set foot in LED driver chip
Founded in 1999, the company is the first batch of listed enterprises on the gem. 2021q3 revenue and net profit attributable to parent increased by 41.7% and 116.29% respectively. Last September, it completed the change of major shareholder and actual controller, acquired 60% equity of Beijing Xinneng and entered the field of mini / micro LED driver chips.
Although the growth of outdoor products industry is slow, structural demand is rising
The growth of outdoor products industry slowed down and the scale remained at about 25 billion yuan. Optimistic about two directions: 1) scene perspective: the camping market is booming, with a 303% increase in heat in 2020 and a scale of more than 30 billion yuan, driving the demand for camping equipment. The state’s dual track construction of residents’ awareness and infrastructure has a large space for the development of ice and snow sports; 2) User portrait perspective: Enterprises’ investment in product R & D may form barriers; “Household second generation” market is quietly rising, and children’s clothing has strong potential; Under the national tide, outdoor national brands are expected to usher in new opportunities.
The scale of the LED industry has expanded, and mini / microled is a deterministic growth field in the future
The rapid development of small spacing LED is expected to drive the demand of miniled direct display in the field of commercial display. The backlight technology has developed from 0 to 1. It is expected that the global market scale will increase by an average of more than 140% in the next 21-24 years. The massive transfer of technology restricts the commercialization of microled, but the commercialization process is expected to be accelerated due to the layout of relevant technologies by international giants, which is optimistic about the priority penetration in the field of VR / ar.
The traditional main business is highly competitive, and the transformation creates the second growth pole
The company’s asset light operation mode ensures better profitability. It has national endorsements such as polar scientific research and technical barriers to competition. The marketing gene is outstanding and has the ability to create characteristic national elements. It is expected that the channel adjustment will be completed and the main business will gradually recover. The company predicts that the net profit attributable to the parent company will be 50 million yuan – 62 million yuan in 2021. Beijing Xinneng can realize miniled direct display and backlight am drive. The direct display and backlight drive chips and PKG module products have been developed and cooperated with industry leaders. The future capacity planning is clear. The microled field is also expected to release products this year.
Profit forecast, with “overweight” rating for the first time
It is estimated that the net profit attributable to the parent company will be RMB 55 / 0.71/178 million from 21 to 23, with a year-on-year increase of 119.9% / 29.2% / 151.5%. The corresponding EPS will be RMB 0.06/0.08/0.20/share respectively, and the corresponding PE will be 138 / 105 / 42 times in 2021 / 2022 / 2023. Although the valuation is slightly higher, considering the gradual recovery of the main business, Beijing core energy will steadily increase its volume this year and give a “overweight” rating for the first time.
Risk tips
Repeated outbreaks; Channel expansion is less than expected; The development of mini / microled industry is less than expected; New business integration is less than expected; Exchange rate fluctuations.
