\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 703 Sanan Optoelectronics Co.Ltd(600703) )
Event: the company announced on March 9 that 1) the company’s major orders for miniled chips have landed. Since the beginning of 2022, the amount of orders signed with a single major international customer has exceeded 170 million yuan. At present, 100 million yuan has been completed, and the rest will be delivered in March this year; 2) The filter has successfully entered the smart machine key customer supply chain. The company’s products have passed the international key customer certification and successfully shipped through ODM factory.
Comments: the company is optimistic about the delivery of miniled chips to international major customers. The strategic partner TCL has recently released a number of new products, and the shipment volume is expected to grow rapidly this year; The integrated circuit business is progressing smoothly, the filter products have successfully entered the international key customer supply chain of intelligent machine, and the company’s performance is expected to continue to improve.
Miniled chip shipments accelerated, and the company laid out in advance to enjoy incremental market dividends.
1) strong demand for orders from international major customers: the company has delivered orders of 100 million yuan to international major customers in January and February, and the shipment volume is expected to continue to increase this year; 2) Strategic partner TCL launched new miniled products to bring incremental market: on March 9, TCL released three new QD miniled products, gradually realizing its strategy of miniled penetration exceeding 60% in the sales of large-scale products. The launch of new products has brought considerable incremental market for miniled chips, Sanan Optoelectronics Co.Ltd(600703) as a strategic partner of TCL and a mainstream supplier of miniled chips in the industry, it is expected to benefit from it first; 3) Early layout and expansion of production to demonstrate the company’s confidence in development: in September 2021, the company announced that it planned to issue A-shares non publicly and planned to invest 6.9 billion yuan in the construction of the mini / micro display industrialization project of Hubei Sanan Optoelectronics Co.Ltd(600703) Co., Ltd. We believe that the raised investment project will help the company promote the upgrading and transformation of product structure.
The IC business is progressing smoothly, and the filter products are entering the mobile phone supply chain.
1) the performance of filter products is leading in the industry and has successfully expanded international major customers in the field of mobile phones: in 2021, the company launched a mass-produced small-size Band1 + band3 Quad, and the product performance of the quad has reached the cutting-edge level of the industry, Sanan Optoelectronics Co.Ltd(600703) becoming the first enterprise in China to provide a full set of quad and duplexer products required by phasevnr architecture; In 2022, the company successfully completed the certification of an international key customer of intelligent machine, and achieved supply through ODM manufacturers. 2) The key layout of silicon carbide, RF and other fields has entered the harvest period: the company’s silicon carbide downstream market has made multiple breakthroughs, and achieved stable supply to benchmark customers in the subdivided application markets such as server power supply, communication power supply, photovoltaic inverter, charging pile and vehicle charger; GaAs RF products fully cover 2g-5g mobile phone PA, WiFi and other application fields. There are nearly 100 customers in China and abroad. It has become the main supplier of China’s leading RF design company.
Investment suggestion: we are optimistic that the company will benefit from the continuous improvement of miniled penetration, the rapid growth of compound semiconductor business capacity and the future potential of RF business. We believe that the company is expected to usher in rapid growth in the next three years. However, in the short term, due to the increase in the depreciation of fixed assets and the slowdown in demand caused by the overseas epidemic, we adjusted the company’s profit forecast. It is expected that the net profit attributable to the parent company in the 21st and 22nd years will be 1.402 and 3.121 billion yuan (the original value is 2.469 and 3.253 billion yuan), maintaining the “buy” rating.
Risk tips: the downstream demand of miniled is less than expected, the progress of miniled project & the climbing of new production capacity in the later stage is less than expected, the demand for silicon carbide is less than expected, and the demand for RF is less than expected
