\u3000\u3000 Luxshare Precision Industry Co.Ltd(002475) (002475)
Conclusions and suggestions:
The company plans to raise 13.5 billion yuan for the construction of wearable products such as smart equipment. We believe that with the rising demand for smart wearable devices, smart cars and miniled, the company, as an industry leader, expanding the production capacity of corresponding products will help further stabilize the industry position and lay the foundation for future performance growth. The long-term impact is positive, but in the short term, due to the construction of production capacity, the increase of share capital will dilute the profit.
We expect the company to achieve net profits of 7.7 billion yuan, 9 billion yuan and 11.2 billion yuan in 2021-23, with year-on-year growth of 6%, 17% and 25% respectively, and EPS of 109 yuan, 1.27 yuan and 1.58 yuan respectively. At present, the share price corresponds to 33 times and 27 times of PE from 2022 to 2023 respectively, which is raised to the “buy” rating.
The company plans to raise 13.5 billion yuan for smart wearable equipment products (3.5 billion yuan), smart mobile terminal precision components (2.7 billion yuan), new energy vehicle high-voltage connection system products (1.5 billion yuan), semiconductor advanced packaging and test products (950 million yuan), smart mobile terminal display module products (800 million yuan) Production line project of intelligent vehicle connection system products (RMB 500 million) and supplementary working capital (RMB 3.55 billion). Based on the average price of 36.44 yuan / share in the previous 20 days (16.3% discount from the current share price), it is expected that the thickened share capital will not exceed 370 million shares, with an increase of about 5.2%. As the demand for smart wearable devices, smart cars and miniled continues to rise, the company, as an industry leader, will expand the production capacity of corresponding products, which will help further stabilize the position of the industry and lay the foundation for future performance growth, with a positive long-term impact.
Cooperate with Chery to strengthen auto parts and components business: the company recently established a joint venture with Chery new energy to engage in the R & D and manufacturing of new energy vehicles. In addition, the controlling shareholder of the company transferred 19.88% equity of Chery holdings, 7.87% equity of Chery shares and 6.24% equity of Chery new energy for RMB 10.054 billion. Through this cooperation, the company will strengthen the layout of automobile business. With the help of Chery group’s technology precipitation and brand resources in the field of new energy vehicles, the company will cross-border empower the technology accumulated in the field of consumer electronics for many years, and in the long run, it will improve the comprehensive ability of the company as the core parts of Tier1 manufacturer.
Profit forecast: since the construction period of fixed value-added projects is 2-5 years, it has limited impact on the company’s performance growth in the short term. It is expected that the company will realize net profits of 7.7 billion yuan, 9 billion yuan and 11.2 billion yuan in 2021-23, with a year-on-year increase of 6%, 17% and 25% respectively, and EPS of 1.09 yuan, 1.27 yuan and 1.58 yuan respectively. At present, the share price corresponds to 33 times and 27 times of PE from 2022 to 2023 respectively, which is raised to the “buy” rating.
Risk tip: covid-19 epidemic has dragged down the release of industrial demand.
