The survey content is as follows:
1. The company's smart display business grew rapidly in the first half of this year. What are the reasons?
LED display demand is strong, mainly due to the following: 1) From In terms of market size, according to LEDinside data, global LED displays maintain a compound annual growth rate of 16%. LED display growth is currently dominated by small-pitch LEDs, accounting for more than half of the market. According to data from TrendForce, the compound annual growth rate of small-pitch LED displays is 27% in recent years. As a leading company in the industry, 80% of the company’s turnover comes from small-pitch products, and has maintained a higher growth rate than the industry in recent years; 2) From the perspective of the development stage, LED display small-pitch products have reached a cost-effective after years of industrial development. The high stage brings economic conditions and feasibility for rapid commercial promotion. New era themes such as digital construction, the video era, and the upgrading of film and television shooting technologies have driven rapid growth in commercial demand. For example, emerging application scenarios such as commercial complexes, XR virtual shooting, outdoor naked-eye 3D advertising, etc. emerge in an endless stream; 3) From the perspective of demand distribution, the epidemic was suppressed last year Part of the demand has increased to a certain extent this year. At the same time, this year's tight supply chain has promoted the further increase of industry concentration, and the advantages of leading companies have emerged.
2. The main reason for the decline in the company's gross profit margin in the first half of the year. Will these unfavorable factors continue into the second half of the year? Is there any improvement expected in the third quarter?
The main reasons for the decline in the company’s gross profit margin in the first half of the year (1) The increase in raw materials. Starting in the fourth quarter of last year, some upstream raw materials have gradually increased in price. The price increase and frequency increased in the first half of this year. The price of goods, especially since June, the cost is completely passed on; (2) Some raw materials are in short supply, and the stocking cycle is shortened. The first quarter of the order to the second quarter confirms the revenue, and the unsynchronization of the order price and the replenishment raw material price causes some orders to not make money , Or even loss; (3) The overseas gross profit margin has also declined due to the impact of the price increase of raw materials, and the proportion of overseas revenue has also declined, which has a limited effect on the overall gross profit margin; (4) The sales of low-margin channel products There has been a substantial increase, accounting for 16% of revenue, an increase of 70% year-on-year, lowering the overall gross profit margin; (5) The volatile appreciation of the RMB against the U.S. dollar in the first half of the year,Put pressure on gross profit margin. Among them, the income structure is the key reason for the impact on gross profit margin. The decline in the proportion of overseas revenue and the increase in the proportion of channel products are the fundamental reasons for the adjustment of the company's gross profit margin. In the third quarter, overseas orders and revenue appear to have improved a lot compared to the data in the first half of the year. Prices of some raw materials were loosened in August, but the overall price remained at a relatively high level. It is expected that the gross profit margin will improve in the third quarter. Follow-up refer to the three quarterly reports disclosed by the company.
3. Introduction to the price fluctuations of upstream raw materials in the third quarter and the proportion of each raw material cost. When is it expected to return to normal?
The cost of materials accounted for about 70-90%, of which lamp beads accounted for 30%-60%, PCB and driver IC each accounted for 10%, and the others were power supplies. Judging from the market in July and August, the prices of some main materials, including driver ICs and PCBs, have relatively returned to rationality, ushering in a moderate callback after the “rush to buy” in the second quarter, but generally stabilized at a high level. According to the data, the raw material prices in the third quarter have improved. When will they return to the normal price level, it is still difficult to judge. The relative price correction in July and August is mainly because the two months are the off-season for channel products, and the demand is not so high. Urgent, so it is transmitted to the raw material end. The fourth quarter is the traditional peak season. Supply and demand may be tight. The final return to normal level still depends on the input of the entire upstream capacity, but it can be judged that the worst has passed. For some The phenomenon of “rush buying” of materials in short supply regardless of cost should not reappear. Generally speaking, it is developing in a good direction.
4. Will LED direct display face direct competition with backlight? Does the company consider the backlight foundry business?
It is too early to talk about competition. Although there is an industry consensus on the trend and path of LED entering the consumer electronics market, there is still a long way to go to the consumer electronics market to achieve the minimum pitch size and product price for industrialization. The business logic and technical basis of backlight products are different from those of direct display. It is meaningless to blindly participate in homogeneous competition. However, in terms of technology and products, the company has a professional team to follow up, and only the cost and technology have been compared. The big advantage has the foundation to push the backlight products.In addition, traditional OEMs for backlight products have comparative advantages. They are striving for scale and cost control. Despite this, the gross profit rate of OEMs is still low. It is very good to be able to achieve 20%. Our current model is normal. Under the circumstances, it is maintained at 30%, and it will not rush into the category with low gross profit margin.
5. Introduction to the company's new production capacity layout.
The company’s new capacity layout is mainly concentrated in the Daya Bay Phase II project. This month, the Daya Bay Phase II project has realized the commissioning of part of the MiniLED and small-pitch production lines. After the first phase of the company's new production capacity, it can meet the sales of about 500 million yuan of MiniLED products, and the newly increased production capacity of the phase is nearly 10,000 KK. Afterwards, the production capacity will gradually ramp up according to market demand, and the overall production capacity plan will be increased to 3-4 times the production capacity of Daya Bay Phase I, and the total output value is planned to be about 12 billion yuan, which will meet the development needs of the next three years.
6. Introduction to the company's competitive advantages.
The company has certain advantages in terms of technology leadership, market share, product reliability, including the grasp of customer needs. After years of development, it has built a solid core barrier as a leading enterprise. The brief description is reflected in: 1) Industry status: The company's industry market share for many years has maintained the top three in the world; 2) Technology accumulation: It has always maintained technological leadership in the LED display field, and the annual R&D investment accounts for about 4.5%, and plans to continue to increase R&D investment; 3) Product structure: a multi-level product structure layout unified with the market strategy, forming a reserve of P0.3-P0.5 products, mass production commercialization of P0.7-P0.9, and P1-P2.5 flagship The best cost-effective products to meet the needs of different customers. 4) Sales network: The company always respects the distribution model. The current sales network covers many countries and regions, and the overseas market accounts for nearly half. The domestic sales network is gradually sinking, and there are more than 4,000 contracted dealers.
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