\u3000\u30003 Hes Technology Group Co.Ltd(002963) 00296)
Event: on April 14, 2022, the company released its annual report for 2021, with an operating revenue of 8.852 billion, an increase of 33.45% over the same period of the previous year; The net profit attributable to the parent company was 611 million, an increase of 162.56% over the same period last year.
The cost performance of LED display continues to improve and the application market continues to expand: according to the report of globaleddisplay marketreport released in August 2021, Leyard Optoelectronic Co.Ltd(300296) has ranked first in the market share of global LED display products, small spacing products and indoor LED products for five consecutive years. After years of development, the price and stability of LED display products have been improved simultaneously, and the cost performance has reached the optimal time point. Small spacing display products have gradually sunk from the high-end market to prefecture level cities and county-level cities in China, and continuously expanded from government applications to commercial applications. Under the epidemic, the demand for video conferencing integrated machines has increased greatly, outdoor LED 3D screens have increased, and creative displays such as spherical screens, sky screens, ground screens, transparent screens and hemispherical screens have emerged. According to the annual report, the company’s revenue of intelligent display sector was 6.899 billion in 2021, with a year-on-year increase of 33.03%. In 2021, the company started the construction of Changsha intelligent display industrial park, and the production capacity was 6000kk at the end of 2021.
Micro led continued to break through and open up new markets for the company: the company’s Micro LED technology launched a 40 inch 2K (P0.4) micro led standardized commercial display product in July 2020, and the industrialization process was promoted as scheduled. According to the 2020 annual report, on October 29, 2020, Lijing, the world’s first micro led mass production base, was officially put into operation. The first phase is from 2020 to 2022. It is expected that the production capacity will reach 1600kk / month after reaching the production capacity in 2022. According to the company’s 2021 annual report, at present, the capacity expansion of Lijing 800kk / month has been completed and has reached the production capacity; The newly signed micro order is 320 million yuan. For cog, the annual report disclosed that the company cooperated with TCL Huaxing to develop and produce the world’s first 75 inch P0 6 oxide am direct display micro ledtv sample, synchronously cooperate to develop the world’s first am glass based transparent display sample, combined with oxide TG device + 3t1c driving technology, which represents the peak of LED display technology at present and the trend of display technology in the future. The breakthrough of microled sector is expected to open new growth points for the company.
Lock in the supply of raw materials and ensure the level of gross profit margin: in the first half of 2021, there was a serious shortage of upstream component driven IC and lamp beads in the LED industry. The company took measures to actively deal with the risk of shortage of raw materials at present and in the future. According to the annual report, the company signed a volume assurance agreement with the driver IC supplier, agreed to meet the company’s ordering demand from May 2021 to December 2022, signed a volume assurance agreement with the LED lamp bead supplier, and met the company’s ordering demand from January 2021 to January 2025. At the same time, the supply prices are lower than the market price, pick up the goods on demand, lock the supply of raw materials in advance, avoid the crisis of insufficient supply and ensure the gross profit margin of the company.
Investment suggestion: we estimate that the company’s revenue from 2022 to 2024 will be 10.928 billion yuan, 13.496 billion yuan and 16.601 billion yuan respectively, and the net profit attributable to the parent company will be 1.039 billion yuan, 1.244 billion yuan and 1.556 billion yuan respectively, maintaining the “Buy-A” investment rating.
Risk tip: the prosperity of the industry is lower than expected; The expansion project is not as expected; Market development is less than expected.
