\u3000\u3000 Hisense Visual Technology Co.Ltd(600060) (600060)
Investment logic
The development of new display of laser TV can be expected: the company’s business is mainly TV. Because LCD TV is constrained by panel supply, the panel cost accounts for nearly 70% and the price of large screen is difficult to decline, so the profit space and valuation level of TV industry are limited. Laser TV breaks the shackles of panel on LCD TV. At the same time, intelligent micro investment enterprises continue to increase consumer education. Consumers’ acceptance of large screen audio-visual experience and projection will be rapidly improved, and the core technology will be more in the hands of display manufacturers. The restriction of upstream optical components will be reduced. The company has strong and mature technology accumulation, and is expected to take the lead in grasping the development opportunities of the industry, Usher in performance improvement;
The downward cost will boost the penetration rate and make up for the marketing shortcomings to strengthen the competitiveness: with the gradual improvement of the localization rate of various core devices and the scale effect brought by the superimposed sales expansion, the cost of laser TV will have room for a significant decline. In 2024, the localization rate of laser TV core devices is expected to reach more than 75% and the cost can be reduced by 40%, which is expected to greatly boost the penetration rate. At the same time, the company has gradually supplemented its marketing weaknesses. In 21 years, the company began to develop high-end comprehensive experience store Hisense quality home offline, and the characteristic sales channels of laser TV were launched simultaneously. Under the dual role of cost reduction and marketing improvement, and under the neutral assumption, we expect the sales volume of laser TV to increase by more than 50% in 22 years;
Stimulating the vitality of the company through mixed ownership reform and equity incentive: at the end of 2020, the company completed the mixed ownership reform and changed from a state-owned enterprise controlled by state-owned assets in Qingdao to no actual controller. On June 30, 2021, the company issued a restricted stock incentive plan (Draft), and the performance evaluation conditions were that the growth rate of non net profit deducted from parent company in 21-23 years was not less than 30%, 55% and 85% respectively compared with that in 20 years, Further stimulate the vitality of employees.
Investment advice and valuation
It is estimated that the company’s revenue from 2021 to 2023 will be 47.63 billion yuan, 54.59 billion yuan and 62.06 billion yuan respectively, with a year-on-year increase of 21.2%, 14.6% and 13.7% respectively. It is estimated that the net profit attributable to the parent company from 2021 to 2023 will be 1.21 billion yuan, 1.56 billion yuan and 1.88 billion yuan respectively, with a year-on-year increase of 1.1%, 29.2% and 20.5% respectively. The current share price corresponds to PE from 2021 to 2023, which are 15x, 12x and 10x respectively. We select Appotronics Corporation Limited(688007) , Skyworth Digital Co.Ltd(000810) , Shenzhen Mtc Co.Ltd(002429) , Guangzhou Shiyuan Electronic Technology Company Limited(002841) , Chengdu Xgimi Technology Co.Ltd(688696) as comparable companies. The average PE of comparable companies in 2022 is 25 times, giving the company a valuation of 18 times in 2022, corresponding to the target price of 21.48 yuan. It is covered for the first time and rated as “overweight”.
Risk tips
The demand for laser TV terminals is lower than the expected risk; The cost reduction rhythm of laser display technology is lower than the expected risk; Price fluctuation risk of raw materials; RMB exchange rate fluctuation risk.
