First coverage report of Toread Holdings Group Co.Ltd(300005) Toread Holdings Group Co.Ltd(300005) company: profitability has been greatly improved and layout driven chips have started a new journey

Toread Holdings Group Co.Ltd(300005) (300005)

The pioneer in outdoor products market has greatly improved its profitability

Toread Holdings Group Co.Ltd(300005) is mainly engaged in the R & D and sales of outdoor products. Its products cover three series: outdoor clothing, outdoor shoes and outdoor equipment. Its market sales volume and market share rank first. It is the largest outdoor products enterprise in China. The company seized the opportunity of recovery in the Chinese market after the epidemic, actively promoted the growth of sales and strictly controlled expenses. In 2021q3, the company realized a revenue of 658 million yuan, a year-on-year increase of 41.70%, and the net profit attributable to the parent company was 30 million yuan, a year-on-year increase of 116.29%.

The rise of yuancosmos promotes the commercial application of microled in Ar / VR field

Microled has superior performance, but in the short term, its commercialization process is blocked due to technical and cost constraints. With the rise of the meta universe, AR / VR ushers in a golden development period, in which the core of AR / VR display focuses on microled. Major manufacturers actively launch terminal application products, which is expected to promote continuous breakthroughs in the technical problems of microled, and mass production of microled products for AR / VR is imminent in the future.

With the decrease of cost and the layout of manufacturers, the market scale of miniled is growing rapidly

Miniled is widely used in both direct display and backlight markets, and the decline in the cost side of miniled highlights the cost performance advantage of miniled. In recent years, enterprises have actively arranged the miniled field. With the maturity of the industrial chain and the acceleration of downstream demand, the miniled market will grow rapidly.

Beijing core can master advanced am driving technology, and microled products are expected to land

In September 2021, the company acquired 60% equity of Beijing Xinneng and entered the field of mini / micro LED display driver chips. The subsidiary Beijing core energy R & D team has outstanding strength, has realized miniled backlight and direct display am drive, and cooperates with leading customers in the industry such as Samsung and LG. At the same time, Beijing Xinneng continues its research and development, and is expected to launch microled related products in 2022 for application in Ar / VR and other fields.

Investment advice and profit forecast

The company is a leading enterprise in the outdoor products business. In the future, while consolidating its advantageous position in the outdoor business, it will actively cooperate with its subsidiary Beijing core energy layout display driven IC business. Benefiting from the high boom of mini / microled market, we expect the company’s performance to usher in rapid growth. From 2021 to 2023, the company’s operating revenue will be RMB 1.077/1.601/2.001 billion respectively, with a year-on-year increase of 18.05% / 48.64% / 25.02%. The growth of driver chip business and the launch of new microled products will significantly increase the company’s profits. We expect the company’s net profit attributable to the parent company to be 43 / 107 / 162 million yuan from 2021 to 2023, with a year-on-year increase of 115.52% / 149.72% / 51.91%. The corresponding EPS from 2021 to 2023 are 0.05/0.12/0.18 respectively, and the corresponding PE of the current stock price is 190.0/76.1/50.1 times respectively. The “overweight” rating is given for the first time.

Risk statement

The risk of rising raw material costs, the risk of retail falling short of expectations, and the risk of driving chip business development falling short of expectations

 

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