(report producer/analyst: Caitong Securities Zhang Yimin )
Company is committed to the research, development, production and sales of small and medium-sized polarizer , and is expanding its large-sized polarizer production line. From 2018 to 21, the company's revenue grew rapidly from 883 million yuan to 2.304 billion yuan, with a CAGR of +37.67%. The company has high cost management advantages, and its gross profit margin in 2021 was 24.99% at the upper and middle level in the industry.
Looking ahead to the later stage, the pressure of raw materials to climb the production line + the depreciation of the yen is alleviated, and the company's gross profit margin is expected to improve significantly.
Company is committed to the research and development, production and sales of polarizers, and is an industry-leading polarizer solution supplier. The company was established in 2007, restructured into a joint-stock company in July 2010, and listed on the Shenzhen Stock Exchange in 2017. The company started out with black and white polarizers, and later focused on tackling various technologies of TFT polarizers.
Company has focused on small and medium-sized polarizers for many years. After digesting the production capacity of Line 3 production line that was put into production in Shenzhen Guangming Factory in 2011, it expanded the production scale of wide TFT polarizers. In December 2015, the company completed the acquisition of Hefei Sanlipu and started construction in 2022, marking that the company has increased its investment in large-sized polarizers, and the future volume is expected.
The main TFT products have increased coverage, and traditional black and white films have grown steadily.
The company's main product is polarizer. In 2021, the revenue of the company's main product polarizer was 2.295 billion yuan, accounting for 99.61% of the company's total revenue. The company's polarizer products can be divided into TFT polarizers, black and white polarizers (TN, STN, dye series), 3D glasses polarizers and OLED polarizers according to their application scenarios.
Among them, the TFT-LCD series is mainly used in color TFT LCD displays, with revenue of 2.192 billion yuan in 2021, accounting for 95.15% of the company's total revenue; the black and white series is mainly used in monochrome and fake color LCD displays, with revenue of 103 million yuan in 2021, accounting for 4.46% of the company's total revenue. The category system of
is constantly improving.
With the increase in the production capacity of the TFT series, the revenue share of the TFT series products has increased accordingly, and the category system has been continuously improved. According to the differences in usage functions and specific film materials, the
TFT product also includes a wide viewing angle polarizer, a brightening polarizer, and a IPS zero-compensation polarizer that reduces color difference, etc., to enable the liquid crystal display to obtain a better viewing angle, and to make the LCD display show higher brightness under the same power consumption, etc., which is more expensive than ordinary functional polarizers.
black and white polarizer business has experienced certain fluctuations in 2020, and has been adjusted in the future. With the introduction of car-mounted black and white polarizers and the expansion of production lines, black and white polarizer orders have increased certainly this year. The increase comes from some high-end products (dye sheets) among black and white polarizers. Due to the strict requirements of high temperature and other requirements for car-mounted products, the gross profit level is also expected to increase.
polarizer products are widely used in industrial application fields such as mobile phones, tablets, computer display screens, LCD TVs, as well as filters used in 3D glasses, anti-glare lenses, photography equipment, etc. In addition, there are special applications including polarization microscope , special medical glasses, etc.
TFT series polarizers are currently mainly used in small-size products, and are used in mobile phones, TVs, tablets, IT, 3D glasses, etc. The second phase of Hefei, which started construction in the second half of the year, plans two 1720mm production lines and the new Putian production lines, correspond to the company's layout in the fields of large-size polarizer products and on-board LCDs; the company's black and white series of products are mainly used in downstream equipment and instruments, calculators, traditional on-board displays, electronic watches, MP3 and other products.
technology precipitates to build cost advantages and customer barriers.
Sanlispot is one of the few domestic polarizer manufacturers with full-process scale production capabilities.With long-term industry technology accumulation and advanced polarizer technology, it has become a qualified supplier of LCD panels and LCD display module manufacturers including BOE , Huaxing Optoelectronics , Tianma, Longteng Optoelectronics , Xinli, Dijing Optoelectronics Network, and has built cost advantages and customer advantages.
As downstream panel manufacturers continue to acquire and expand, the company's sales are gradually concentrated.
2014-16, the revenue of the company's top five customers accounted for 36.84%, 48.11% and 56.98% of the total revenue, respectively. Customer concentration has stabilized in recent years. In 2019-21, the proportion of revenue of the company's top five customers accounted for 54.21%, 57.03% and 53.67% of total revenue, respectively, and the proportion of sales to the largest customers was 14.45%, 19.95% and 18.37% respectively.
company focused on the basic base of core customers, and the absolute value of revenue from the top five major customers increased significantly. The revenue contribution of the largest customer increased from about 167 million yuan in 2018 to 423 million yuan in 2021, and the total revenue scale from the 2-5th customer also increased from 316 million yuan in 2018 to 813 million yuan in 2021.
high-level leading technological innovation.
Mr. Zhang Jianjun has been serving as the company's chairman and general manager since the establishment of the company, deeply bound to the company's interests.
The directors and senior executives of the company are experienced technical experts in the industry. Chairman Zhang Jianjun led the team to deeply cultivate polarizers for more than 20 years. He has presided over the production of polarizer production lines many times, participated in the formulation of industry national standards, and led the team to overcome the core technical difficulties of TFT polarizer manufacturing.
In addition, company executives Sun Zhengmin and Hu Chunming have rich experience in production technology and downstream customers. The annual report shows that in 2021, the new R&D department of Putian Sanlipu and Shenzhen Sanlipu Optoelectronics Technology has increased by 120.77%. The company has established a complete talent reserve system through internal training and external recruitment to support the company's R&D team to gather strength.
shareholding plan binds the company's core employees.
Company released an employee stock ownership plan in October 2021, covering 6 directors, supervisors, senior executives and 282 core members of the company. It aims to clarify the common interests of core employees and the company, encourage core employees, and ensure the company's long-term and stable performance growth.
According to the plan, the company's performance appraisal targets for 2021-23 are net profits attributable to shareholders of RMB 300, RMB 400, and RMB 520 million, respectively, corresponding to a compound growth rate of more than 30%. In 2021, the company's annual report showed that the company's net profit attributable to its parent was RMB 305 million, completing the assessment target of the first phase of the stockholding plan.
Revenue grows rapidly, profitability bottoms out and rebounds. As the company made a series of capacity adjustments and layouts in 2012-18, and the progress was hindered by factors such as customer factory audits, its performance slowed down before 2018.
Then, with the company's Guangming factory and Hefei factory gradually full production and the Longgang factory put into production, coupled with the high prosperity of the downstream market, the company's revenue increased rapidly from 883 million yuan to 2.304 billion yuan in 2018-21, and the CAGR reached +37.67%.
After that, the increase in production capacity and yield rate indirectly eliminated the pressure of depreciation and exchange, driving the company's net profit to increase by 188.91% year-on-year to 338 million yuan in 2021.
Due to the impact of the epidemic, downstream demand has slowed down, and the production and climbing speed of Longgang factory was delayed. The revenue in Q1 2022 was 552 million yuan, a year-on-year -0.73%. As the impact of the epidemic on raw materials and other aspects gradually eases, the 1490mm production line of the Longgang Factory in 2022Q3 is expected to be close to full production.
plus the 1490mm production line with an annual production capacity of 30 million square meters of Putian factory will be put into production in Q3 2022. The increase in production capacity is expected to support the company's continued growth in performance.
Company gross profit margin The Hefei factory started to climb in 2016, which led to a decline in the company's gross profit level in 2017 and 2018.
As the Hefei production line gradually completed the production capacity climb and the industry's prosperity increased, the company's polarizer business gross profit margin increased from 16.60% to 24.84% from 2019 to 21.
Among them, since the main raw materials of black and white polarizers have been domestically produced, the gross profit margin of black and white polarizers in 2021 was 33.45%, slightly higher than the gross profit margin of TFT polarizers (24.43%).
Due to the economic impact and other factors, the revenue share of mobile phone products with high profitability has decreased; and the Longgang production line, which the company put into production in the second half of 2021, is in a period of capacity climbing, which has put pressure on the company's gross profit. In 2022Q1, the company's gross profit margin has been reduced to 21.08%.
We select deep textiles in the field of polarizer A, Shanshan Co., Ltd. , Lite Optoelectronics, and Chengmei Materials as comparable companies.
The industry average gross profit margin in 2021 was 19.80%, and the company's gross profit margin was 24.99% at the upper and lower level. It is mainly expected that the company's large-scale small polarizers in the TFT polarizer business correspond to downstream mobile phones and IT products, and their gross profit is higher than that of TVs; on the other hand, because the company has high cost management advantages, and through cooperation with manufacturers to develop equipment, the cost and depreciation pressure of new production lines are much lower than those of peers.
Looking ahead, the Longgang production line will soon complete the capacity climb, and the pressure on raw material prices will ease with the depreciation of the yen. In addition, high gross profit in-vehicles and VR are expected to gradually increase in volume, and the company's gross profit margin is expected to be significantly improved.
In the long run, the company's main TFT polarizer products are at the upstream of the "smile curve" of the TFT-LCD industry chain. After the company's upstream raw materials are promoted, it is expected that the gross profit margin can be further increased to the standard level of 40% in the curve.
profit margin gradually bottomed out and recovered. In 2021, the company's R&D, management, sales and financial expense rates were 4.48%, 3.03%, 0.76%, and -0.02% respectively; the period expense rate was 8.26%, an improvement of 1.65% year-on-year from 9.91% in 2020.
Among them, since some of the company's key raw materials need to be imported from Japan, foreign currencies payable are mainly settled in Japanese yen, while foreign currencies receivables are mainly settled in US dollars. With Japan's depreciation and the appreciation of the US dollar, the financial expense rate continues to decline, and the decline to -1.03% in Q1 2022 has significantly improved.
As the panel industry shifts to China, the demand for upstream supporting industries continues to expand. According to the calculation of using two polarizers for one LCD, the corresponding polarizer demand for domestic LCD panels in 2022 is 437 million square meters per year.
Domestic polarizer supply is currently very limited, and there is huge room for domestic substitution. In addition, polarizers are developing rapidly in the fields of vehicle-mounted and VR.
According to IHS forecast, the proportion of passenger cars using 3 car screens will increase from 1% in 2021 to 19% in 2030; according to ZoS Automotive, the size of vehicle screens is also showing an increase.
Global VR headset shipments in 2021 reached 10.95 million units, up 92.1% year-on-year. It is expected that global VR headset shipments in 2025 are expected to exceed 100 million units.
polarizer (polarized light sheet) is a composite material made of polyvinyl alcohol (PVA) and cellulose triacetate film (TAC) through stretching, composite, coating and other processes. After the PVA film is stained, the iodine molecules are adsorbed. The iodine molecules are arranged in an orderly manner on the PVA film through stretching to form a polarizing film with uniform two-way absorption performance, and its transmission axis is perpendicular to the direction of stretching.
When natural light passes through the polarizer, light with a vibration direction perpendicular to the polarizer's transmission axis will be absorbed. Only the transmitted light is polarized light whose vibration direction is parallel to the polarizer's transmission axis.
At present, LCD and OLED are mainstream display technologies, but due to the technical difficulties such as low yield and short life of OLED panels, the large-size panels have not yet been fully solved, and large-size panels have not yet been widely used, so TFT-LCD panels are the main market for polarizers.
polarizer currently accounts for about 7% of the cost of LCD panels.
There are two polarizers in the LCD display module that are attached to both sides of the glass substrate. The imaging of the LCD display module must rely on polarized light. Without any polarizer, the LCD display module cannot display images.
According to the data from Toubao Research Institute, the overall LCD panel cost ratio is 7%. If labor costs and equipment costs are removed, the polarizer currently accounts for about 10% of the cost of LCD panels. The future market development is closely related to the downstream panel industry.
As the panel industry is transferred, the demand for upstream supporting industries continues to expand.
The United States and Germany first achieved breakthroughs in the underlying technology of panels. Japan achieved industrialization of panels in the 1990s. The main manufacturers include Sharp , Epson, Hita , Toshiba , etc. As Japan-US trade conflict intensified, South Korea and Taiwan, China made breakthroughs in the panel field in 2004 and began to dominate panel production.
2012 After 2012, the mainland Chinese panel market has been continuously expanding production with the advantages of national policy support, industrial clusters and cost. After 2017, a duopoly pattern dominated by BOE and Huaxing Optoelectronics was formed. According to Digitimes' forecast, my country's large-size LCD display panel production capacity is expected to exceed 60% in 2022.
According to Omdia, the global TFT LCD production capacity will grow from 339 million square meters in 2021 to 375 million square meters in 2026. Among them, BOE and TCL Huaxing contributed 87 million square meters and 47 million square meters of production capacity respectively in 2021, accounting for 25.66% and 12.53% of the global production capacity respectively.
Generally speaking, the polarizer demand for an 8.5 generation TFT-LCD production line is about 14 million square meters per year. As the domestic high-generation LCD panel lines are completed and put into production one after another, downstream customers are generally willing to use domestic polarizers under the premise of ensuring quality. Therefore, under the trend of localization supporting facilities, China is expected to become one of the largest markets in the world with the largest demand for new polarizers.
We assume that the calculation based on the use of two polarizers for LCD panels, regardless of losses, the corresponding polarizer demand for domestic LCD panels in the case of full production in 2022 is 437 million square meters per year.
The current supply end of domestic polarizers is very limited.
According to Omdia data, the global supply of polarizers in 2022 will be 625 million square meters/year, and the glut value will be 1.96%. After that, the supply and demand situation of the polarizer market will become tight, and there will be a temporary shortage in 2024, with the supply and demand gap exceeding 1 million square meters/year. Coupled with the trend of domestic substitution of polarizers, there are greater differences between the supply and demand of domestic polarizers.
Since 2021H2, although the panel industry has been affected by the conflict between Russia and Ukraine, intensified inflation, repeated epidemics in some regions, and the decline in panel prices, since the price of polarizers is mainly determined by supply and demand, the price of panels has little impact on the price of polarizers. Moreover, the company's layout on TV's medium and large panels is in its early stages, and its performance remains unchanged with the growth trend of production capacity.
car display market prospects.
Since electrification began to lead the new energy vehicle market in 2020, smart cockpits and autonomous driving have gradually become key areas for today's competition for car companies. Among them, the on-board display includes the instrument screen to display the body information of the vehicle, the central control screen and the streaming media rearview mirror to display the road conditions and driving information, the central control screen integrates mechanical buttons, and can integrate more functions, the car co-driver and the rear entertainment display screen, providing more personalized functions such as games, videos, office meetings, etc.
Smart cockpit Penetration rate is constantly increasing.
According to monitoring data of Gaogong Intelligent Automobile Research Institute, the number of new passenger cars in front-mounted digital networked cockpits in the Chinese market (excluding imports and exports) in China from January to April 2022 was 2.4406 million, an increase of 28.36% year-on-year; the front-mounted loading rate was 42.57%, an increase of nearly 15% year-on-year.
According to IHS forecast, the penetration rate of smart cockpits among new cars around the world in 2025 is expected to be close to 60%, and China has grown to 76%, and the penetration rate is significantly higher than the global average.
1) The number of car screens on bicycles is expected to continue to increase.
Traditional cars only have instruments and central control displays, which are difficult to meet consumers' in-car entertainment needs. With the upgrade of intelligent driving and the continuous improvement of safety requirements, the on-board screen needs to provide road information in multiple directions to remind drivers of dangerous situations.
New energy vehicles have added more intelligent screen settings such as HUD, windows, sunroofs, etc., and the screen usage is far greater than that of traditional cars. The "one core and multiple screens" industry trend is expected to form strong self-verification in the automotive electronics industry, while promoting the improvement of ARPU.
According to IHS data, the proportion of 3-inch car display screen (excluding instruments, HUDs, and rearview mirrors) in 2021 is less than 1%. It is expected that the proportion of 3-inch screens can reach 19% in 2030, with a significant increase in the proportion.
2) Car display is gradually developing towards large screens.
car display screen acts on the interactiveness and entertainment of the smart cockpit. It is similar to the mobile phone panel, transferring more functions achieved through traditional buttons to the screen. Large-screenization has become a trend of industrial development.
According to Zosi Automotive, the proportion of my country's central control panels above 14 inches has reached 8% in 2021, and is expected to increase to 20% in 2025.
has a more significant trend in new energy vehicles. According to CINNO Research data, the shipment of domestic new energy passenger cars equipped with central control screens of more than 12 inches in the first three quarters of 2021 accounted for 48% of all new energy passenger cars in China, accounting for 29 percentage points higher than that of traditional fuel vehicles in the same size segment; the proportion of domestic new energy passenger cars equipped with LCD panels of more than 8-10 inches and more than that of domestic new energy passenger cars was 20% and 45% respectively, and the proportion of traditional fuel vehicles equipped with the same size segment was 13 percentage points and 20 percentage points higher than that of traditional fuel vehicles.
The proportion of LCD applications of vehicle display panels in downstream panel factories is accelerating.
Omdia Data shows that in the LTPS LCD factory production line distribution plan of first-tier panel manufacturers, vehicle in-car and notebooks will gradually replace smartphones and become the main application market for LTPS LCD production. Vehicle panel shipments are expected to reach 9.72% in 2020-25, reaching 237 million pieces in 2025, accounting for 9% of global TFT-LCDs.
actively increases in on-board production capacity and opens up space for growth.
Since car display requires strong durability in high and low temperature environments, it has high added value and technical difficulty. In 2021, the company's high-durable automotive dye-based polarizers will be mass-produced in many customers; the performance of automotive iodine-based polarizers has been stable at 95℃×500H and will continue to be improved.
The company's long-term focus on small and medium-sized polarizers will be used in the field of automotive. Other domestic polarizer manufacturers still focus on the production of ultra-large polarizers. For example, Shanjin Optoelectronics' trial production this year is all 2250mm ultra-large wide-frame production lines. The company is currently building a 1490mm production line in Putian, dedicated to the production of on-board display polarizers. It is expected to be put into production in 2022Q3, and is expected to benefit from the high prosperity of the on-board display industry in the future.
Global VR market scale expansion accelerates. Facebook acquired Oculus for US$3 billion in 2014, opening up the history of VR development; 2016 was the first year of the development of the VR industry, and major companies successively launched the first generation of VR products and began to iterate products; after experiencing the trough period from 2016 to 19, with the gradual implementation of
According to IDC data, the global shipment of AR/VR headsets in 2021 reached 11.23 million units, a year-on-year increase of 92.1%, of which the shipment of VR headsets reached 10.95 million units (Oculus share reached 80%). It is estimated that the global shipment of VR headsets will reach 15.73 million units in 2022, a year-on-year increase of 43.65%.
2023 will become a key year in the VR industry, because Meta, Pico and Sony will all launch the next generation of headsets, and Apple is also expected to release an mixed reality headset.
According to Counterpoint, the global shipment of XR (VR/AR) headsets is expected to exceed 100 million units, reaching 110 million units, and the CAGR of 2021-25 will reach 77.43%.In terms of the industry structure of
, according to Counterpoint data, the market share of major global VR brands Oculus, DPVR and Pico in 2021 was 80%, 4% and 4% respectively. As of the end of 2021, Oculus Quest2 has shipped more than 10 million units, becoming the world's best-selling VR headset product.
, while the domestic market is dominated by domestic brands. IDC report shows that domestic manufacturer iQiyi Qiying performed strongly in 2021Q4, with omni-channel sales increasing by 475.9% year-on-year, and market share reached 22.5%, leading the industry.
From the perspective of the whole year, iQiyi Adventure VR shipments accounted for 27.4% of the industry, ranking second in the industry, and has divided more than half of the market share with Pico, a subsidiary of ByteDance, the industry leader.
Pancake is expected to become the preferred optical solution for VR upgrades in the next 3-5 years.
VR optical solution technology mainly goes through three stages: aspherical lens, Fresnel lens and Pancake solution.
Early VR boxes such as Samsung Gear VR, Storm Box and Thousand Magic Mirror VR Box, as well as iQiyi Adventure Dream, PS VR and other headsets use aspherical lenses.
Because aspherical lenses will darken the edges and corners, the Fresnel lens is gradually used. Its advantages are clear imaging, large field of view angle, low mass production difficulty and low cost, such as Meta Quest 2, Pico neo 3, Nolo Sonic, HP Reverb G2, etc.
As consumers put forward higher requirements for VR, as well as imaging quality and wearing experience, the Pancake solution with the principle of folding optical path has gradually become the development and evolution direction of consumer-grade VR optics. Leading companies represented by Meta, Apple, Pico, , Huawei , etc. have launched and will soon launch the Pancake solution headset. The Pancake solution is expected to become the first choice optical solution for VR upgrades in the next 3-5 years.
Pancake is only 1/4 of that of Fresnel lens.
Pancake compresses the total optical length of VR (TTL) through the folding optical path: After the image source enters the semi-inverted and semi-transparent lens, the light is folded back several times between the lens, the phase retardation plate and the reflective polarizer, and finally emits from the reflective polarizer.
This optical solution product has the advantage of being lightweight and thinner, which has been reduced by more than half compared to the current mainstream VR headsets, effectively improving comfort.
On July 25, Skyworth VR held a new product launch conference to release the world's first consumer-grade short-focus 6 DoF VR all-in-one. The Pancake folding optical solution equipped with PANCAKE 1 is only 1/4 of that of traditional Fresnel lenses, with a thickness reduction of more than 50%, and the weight of the host is only 189g.
Pancake Optical key points are products and films. Pancake optical module production mainly includes six processes: optical design, lens processing, lens filming, assembly, inspection and packaging.
Currently, products and processes are monopolized by overseas optical film giants, so they are the key point in the development of domestic VR optical.
1) Pancake requires that linearly polarized light must have a relatively high polarization state and transmittance .
The thinner solution requires lower birefringence and more stable polarization state transmission. Therefore, the quality of the reflective polarizer film and 1/4 phase delay film is a key factor in imaging quality. Only a few companies such as 3M and Asahi Kasei can meet the Pancake design requirements.
2) The filming method mainly includes curved film and flat film. The plane filming technology is relatively difficult, but it will sacrifice some of the optical performance and imaging quality.
curved film process uses the pre-prepared flat film layer and heat bending forming technology to make it a specific two-dimensional curved surface. It is attached to the lens surface. The curved film brings greater FOV and better imaging quality. However, the curved film process is difficult, and it is prone to wrinkle and curl around the edges, and has a low yield. Due to the high process requirements, membrane suppliers such as 3M have begun to launch film delivery solutions.
accelerates Pancake optical film industry layout.
Company VR related products have been developed for 2 years, including polarizers, which is a natural expansion of the company's original technology.
Company provides two types of solutions for Pancake folding optical path system: one is the application of polarizers on the display end of Pancake module, the other is the linear side bonding and QWP side bonding at the near-eye end, and the polarizers are processed by laser cutting or CNC cutting.
has deployed VR production equipment, jointly developed VR products with customers, and actively verified VR products with downstream manufacturers. According to the company's announcement, the new products are expected to be shipped first in the second half of 2022. The company is currently focusing on polarizer materials and bonding polarizers with other film materials to gradually improve product accuracy and design level. This business is expected to become a new driving force for the company's performance growth in the future.
The company is deeply engaged in the polarizer field, and its business expansion is constantly ongoing. At present, ultra-high-durable automotive dye polarizers have been mass-produced, and ultra-high-durable automotive iodine polarizer certification is under certification; VR has polarizer technology and can perform high-precision processing and cutting. Currently, only domestic companies and Taiwan Lite have the competitive landscape.
currently has 6 production lines in production; the new production lines under construction in Putian are expected to be put into production within the year, with a planned production capacity of 6 million to 10 million square meters per year; the second phase of Hefei is planned to start construction within the year, and will be put into production within the year in 2023, with a planned production capacity of 30 million square meters per year, and it is estimated that the company's overall production capacity will reach 70 million square meters per year in 2024.
polarizers have a high technical threshold. Compared with companies in Japan, South Korea, Taiwan and other places, mainland Chinese companies started late. Before 2020, the competitive landscape was dominated by three major manufacturers: LG Chemistry , Sumitomo Chemistry , and Nitto Teng Kee .
With the continuous accumulation of technology in emerging markets, mainland manufacturers have upgraded from low-level TN/STN/PM-OLED products to accelerate the introduction of TFT/AM-OLED products.
According to the CINNO Research report, the top three polarizer manufacturers' sales in 2021 are Sumitomo Chemical Sumitomo, Nitto Nitto, and Shanjin Optoelectronics Shanjin, which completed the acquisition of LG Chemical polarizer production line. The three companies account for about 63% of the overall market share, and the market concentration of Japanese and Korean manufacturers has decreased.
R&D end continues to invest and continuously overcome technical issues. In 2021, the company's R&D expenses were RMB 103 million, an increase of 18.15% year-on-year, accounting for 4.48% of revenue; in Q1 2022, the company's R&D expenses were RMB 31 million, an increase of 26.90% year-on-year, accounting for 5.65% of revenue.
polarizer breaks the monopoly and the layout continues to advance.
Company has been deeply engaged in polarizers for many years and has fully mastered key technologies such as PVA membrane dyeing, extension, and composite, pressure-sensitive adhesive development technology, warpage control technology, automatic appearance inspection technology, and equipment design and integration technology, successfully breaking the technological monopoly of Japan and South Korea.
company has the production capacity of polarizers required to meet the requirements of many downstream application fields. The effective thickness of the product can reach up to 79μm, and can provide customized products of different thicknesses such as 90μm, 120μm, 130μm, 150μm, 210μm, etc.
According to the company's 2021 annual report, in addition to the progress of on-board products mentioned earlier, the company's blind hole screens are fully mass-produced with low-shrink punched polarizers; some customers have passed the test of 115 micron flexible AMOLED polarizers, and similar products have been mass-produced in large quantities in wearable applications in 2021; subsequent ultra-high transmittance LCD polarizers and LCD polarizers with a combined thickness of 150um are continuing to be developed.
2022 H1 The company has announced the acquisition of 8 new patents, including polarizers that can improve the peeling efficiency of release film, residual glue device and multi-layer film bonding device, and other core technologies involving polarizer production. The company's R&D efficiency is high, and it is expected to continue to expand its advantages in reducing costs and increasing efficiency, and strengthening core technologies in the future, and stabilize technical barriers.
long-term focus on medium and small-size polarizer products with high gross profit.
Company has industry-leading core competitiveness in the fields of vehicle, VR, mobile phone, industrial control and small-size TV. Compared with medium-sized polarizers, the processing of small-sized film materials has higher accuracy requirements. For example, in the VR business, the company with polarizer technology and high-precision processing and cutting, only Sanlispo and Taiwan Lite Optoelectronics have related layouts.
According to the company's announcement, the company's small and medium-sized polarizer shipments in 2021 will be 208.15 million sets, including 181.25 million sets for consumer products and 26.9 million sets for wearable products (including OLED); the main cooperative terminals are Xiaomi, OPPO, VIVO, Honor, Samsung, Transsion, Amazon, Lenovo, ZTE, etc.
has a large-size shipment volume of 88.13 million sets, and its main cooperative terminals are Amazon, Samsung, Sharp, Google, Baidu, Zhashou, Lenovo, Dell, etc.
The future capacity expansion is mainly concentrated in mainland Chinese enterprises. In recent years, Japanese and Korean companies have relatively conservative production line expansion plans, while my country's polarization industry has been investing in recent years. LG chemical polarizer production lines have been acquired by Shanshan; Nitto Electric suspended production expansion and instead cooperated with Chinese companies to build production lines by providing equipment design, customization and technical services.
overall global polarizer production capacity is showing a trend of rapid domestic expansion and gradually replacing the Japanese and Korean share. According to CINNO Research data, it is estimated that by the end of 2025, the proportion of polarizer manufacturers in mainland my country's mainland will exceed 50%.
According to announcements from various companies, in 2021, domestic manufacturers, Sanlipu, Shenzhen Textile and Shanshan Co., Ltd., plan to expand production capacity of 162 million square meters per year.
In 2024, the company's overall production capacity will reach 70 million square meters per year.
As of July 2022, the company actually has 6 production lines in production, of which Guangming Factory No. 1 production line has been merged into Longgang No. 6 production line, undertakeing the production of the middle and post-processes of OLED and LCD production lines.
Longgang Factory No. 6 production line currently reaches a production rate of about 70%, and is expected to reach full production within the year; Putian's 1490mmTFT full-process production line project is in the final stage and is expected to be put into production in 2022Q3; Hefei Phase II first 1720mmTFT full-process production line is planned to start construction in 2022H2 and put into production in 2023.
If the climbing progresses smoothly, the company expects to have a production capacity of 70 million to 100 million square meters per year in 2024. The second phase of Hefei production line also marks that the company will take into account the supply of large-size polarizers. Based on the advantages of the client, the company expects to have a significant increase in revenue and share.
The investment efficiency of expansion is leading in the industry, and the investment of new capacity units is lower than that of comparable companies.
In recent years, the company has followed the trend of domestic substitution and actively expanded its production capacity. Based on its rich experience in self-built production lines, it has independently designed and renovated equipment factories to ensure stable expansion of production capacity with low fixed asset investment.
According to the company's announcement, the second phase of Hefei production line construction project, which was invested by Sanlipu, has a fixed asset investment of 1.121 billion yuan, an annual designed production capacity of 30 million square meters, and it is estimated that a fixed investment of 35-40 yuan per square meter of production capacity will be required.
During the same period, Shanjin Optoelectronics' fixed investment demand per unit capacity was at the level of 50-70 yuan; Shengbo Optoelectronics' fixed investment demand per unit capacity was around 54 yuan, both far higher than the company's level.
tangent line width and level have advantages.
According to the "Feasibility Analysis Report on Changes and Delays of Investment Projects for Raised Funds" released by the company on December 28, 2021, the company changed the entire process production line for ultra-wide TFT-LCD with a width of 2500mm to the first domestic 1720mm production line, with large-size TV polarizers cut.
Company's 1720mm wide production line can use domestic raw materials to cut two 65-inch upper sheets, and can also cut 65-inch and 32-inch sleeves.
According to Omdia, the efficiency of the ultra-wide production line will decrease with the increase in size, so the cutting utilization rate of the production of 43/55/65 inches is relatively high, and the cost is about 10% higher than that of the ultra-wide production line.
Currently, the company's main customers, BOE, Huaxing Optoelectronics, Huike Co., Ltd., TVs produced by panel factories such as high-generation lines are mainly 43/55/65 inches, and the Hefei Phase II production line can be fully matched.
In addition, in 2021, the company obtained 7 patent certificates, including polarizer detection devices and cutting methods to improve the utilization rate of polarizer materials. The company has advantages in cost, efficiency and yield. Therefore, the first production line of Hefei Phase II, which was put into production in 2023H2, aims to widen the gap with competitors at the cost side, effectively improve the company's gross profit level and ability to increase market share. It is expected that the company will occupy a favorable situation in profitability in the future to support the market development process.
hypothesis: company has been in the stage of increasing investment in the construction of new production lines in recent years. We assume that the construction of the new production line is smooth, downstream demand has grown steadily, and after completion, the production capacity has climbed at a constant speed for 2 years to reach full production, and there is no technical iteration that has caused huge fluctuations in the demand for polarizers.
TFT series: With the new production line of Putian factory and Hefei Phase II project in 2022, we expect the company's TFT series polarizer production capacity to be 34 million/38 million/52 million square meters from 2022 to 24, showing an increasing trend year by year.
Small-sized products such as in-vehicle and VT have a higher unit price, and the climb in new production capacity will drive the company's overall sales price and gross profit margin of TFT polarizer products.
It is estimated that the TFT series business will achieve revenue of 2.891/3.801/4.79 billion yuan in 2022-24, with a gross sales profit margin of 20.00%/21.50%/22.00%.
black and white series: black and white series polarizers have a small size. The company plans to acquire the Fujian Putian factory as the No. 9 production line. We expect the company's black and white series polarizer production capacity to be 1.20/240/2.4 million square meters from 2022 to 24.
benefited from the introduction of in-vehicle products and the average selling price is expected to increase. It is expected that the black and white series business will achieve revenue of RMB 109/173/228 million in 2022-24, and the gross sales profit margin will remain between 34% and 35%.
Selected Shanshan Co., Ltd., Shen Textile A, Jizhi Technology and Jiemei Technology as comparable companies. According to Wind's consistent forecast data, the industry average PE in 2022-24 will be 22.38/15.05/11.97 times respectively.
's company's technical advantages in the field of polarizers benefit from the trend of domestic substitution and the company's production line climbing, and superimposedly optimizes the structure of emerging products in VR and automotive.
is expected to be RMB 324/501/680 million in 2022-24, respectively, with an EPS of RMB 1.86/2.88/3.91 yuan, and a corresponding PE of RMB 24.45/15.82/11.65 times, respectively.
1) The risk of forced delay in production expansion.
The company plans to produce more production lines. For example, encountering local epidemic disturbances during construction, installation of equipment, trial production, etc., which may lead to delayed production capacity release and disrupt production plans.
2) Technical route risk.
OLED display 1 polarizer required is different from the polarizer used in LCD. If the technical route tends to change significantly and the company's product research and development is out of touch with it, it will have an adverse impact on the company's product sales.
3) Car display product certification risk.
Company Putian No. 8 production line plan to use IT products to climb production capacity in the early stage, and after obtaining certification, it will turn to high-priced and quality vehicle-mounted display products. If the certification is not smooth, it will affect the company's product deployment plan.
4) Risk of poor sales of VR products.
Company supplies polarizers to VR devices that use pancake optical solutions. If terminal VR products are not sold well, this part of the business will also be difficult to quickly increase the volume.
5) Concentrated risk of supply of raw materials.
PVA membrane and TAC membrane are the core raw materials in the company's production process. Currently, it is mainly Japanese suppliers, and the progress of localization is relatively low. If there are accidents in upstream operations or changes in the international trade environment, the sharp fluctuations in raw material prices will have an adverse impact on the company's profitability.
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