\u3000\u3000 Focus Lightings Tech Co.Ltd(300708) (300708)
Event: the company issued the annual report of 2021.
With capacity expansion and product upgrading, the company’s revenue increased rapidly in 2021. In 2021, the company realized a revenue of 2.009 billion yuan, a year-on-year increase of + 42.83%; The net profit attributable to the parent company was 177 million yuan, a year-on-year increase of + 728.43%. Under the influence of the overseas epidemic, the global LED industry continued to transfer to China. The company grasped the good opportunity and maintained the production rhythm of full production and full sales. In 2021, the company’s LED chip production capacity reached 19.19 million, a year-on-year increase of + 35.14%, and the capacity utilization rate and production and marketing rate were 98.72% and 99.15% respectively.
The fine management has achieved remarkable results, and the net profit margin of the company has increased significantly. In 2021, the company’s gross profit margin was 16.89%, a year-on-year increase of + 3.45pct; The net interest rate was 8.81%, a year-on-year increase of + 7.29pct. Through continuous research and development, the company improves product performance, and then promotes the rise of ASP. In addition, the proportion of medium and high-end products such as high light efficiency, flip chip and backlight increased, which jointly led to the increase of gross profit margin. Benefiting from the good cost control ability, the company’s expense rate continued to decrease during the period. In 2021, the company’s management expense rate, sales expense rate and financial expense rate were 1.83%, 0.52% and 1.20% respectively, with a year-on-year increase of -0.55pct, -0.15pct and -2.41pct.
The operation efficiency has been steadily improved, and the profitability under the scale effect is expected to be further improved. The company implements the business strategy of “adjusting structure, improving performance, reducing costs and creating benefits”, and its operation efficiency ranks at the leading level in the industry. In 2021, the company’s inventory turnover rate was 8.46, an increase of 27.60% over the same period last year; The total asset turnover rate was 0.71, an increase of 33.96% over the same period last year. With the direct sales mode, single production base, fine management mode and simple management team, with the expansion of sales scale, the sales expense rate and management expense rate will continue to be diluted, and the profitability of the company is expected to be further improved.
Miniled is about to open in large quantities, and new product R & D is actively arranged. The company’s miniled products have been verified by customers. The silver mirror products have passed the design samples. The high bandwidth GaN based visible light communication chip jointly developed with the semiconductor Research Institute of the Chinese Academy of Sciences is progressing smoothly. With the newly purchased MOCVD equipment and chip manufacturing equipment in place, the mass production of the new products can be expected. In June 2021, the company’s fixed increase project plans to add 1.2 million miniled chips per year, which is expected to be gradually released in 2022.
Profit forecast: the company is optimistic about the substantial increase in net interest rate brought by scale effect under the improvement of product structure and steady expansion of production. We expect that the net profit attributable to the parent company in 2022, 2023 and 2024 will be RMB 359 / 521 / 743 million respectively, with a year-on-year increase of + 102.92% / + 45.02% / + 42.64%, corresponding to 26 / 18 / 12 times of the share price PE on February 8, maintaining the “buy” rating.
Risk tip: industry competition intensifies, capacity release is less than expected, and downstream demand is less than expected.
