Sanan Optoelectronics (600703): Annual report preview meets expectations LED is expected to bottom out and rebound


Sanan Optoelectronics (600703): Annual report preview meets expectations LED is expected to bottom out and rebound

Event: Sanan Optoelectronics released the 2019 annual report performance forecast, which is expected to achieve net profit attributable to mothers in 201912.


US $ 5.7 billion, an average of 45-55% over a ten-year period; non-net profit of RMB 100 million was deducted6.

700-900 million, 60-70% of the previous decade.

  LED is recommended to bottom out.

2019 is a year of LED chip adjustment. Due to oversupply in the first 苏州夜网论坛 three quarters, chip prices have fallen sharply, which has caused Sanan Optoelectronics’ gross profit margin to shift and its operating performance to decline.

By the fourth quarter, prices started to stabilize.

At the same time, the company’s integrated circuit business achieved a reduction in sales in the first three quarters, and only started to increase the volume in the fourth quarter. The reduction in losses was limited, and the integrated circuit business continued.

The LED industry has experienced a two-year downward cycle, and the price of LED chips has fallen to the cash cost line of a large number of manufacturers.Sanan Optoelectronics is expected to benefit first.

  The concentration of the LED chip industry has increased, and Mini / Micro LED technology has become a competitive advantage.

Expansion, the trend of LED chip production capacity shifting to mainland China has been obvious; the expansion of the LED chip industry in mainland China is facing a reshuffle pattern due to the continued decline in prices, and the industry concentration has increased.

Micro / micro LED technology has become a competitive advantage, and various manufacturers have deployed.

Sanan Optoelectronics is actively deploying mid-to-high-end products such as MINI LEDs, which are expected to open new market demand.

The recent trend of mini LED continues to be positive. Mini LED shines at CES. Many terminal manufacturers plan to launch mini LED backlight or display products in 2020. Samsung ‘s wall sales exceed expectations. 2020 is expected to become the first year of mini LED explosion.

From the perspective of supply and demand, there are only a few companies in the world that can create mini LED chips. Sanan Optoelectronics’ advanced high-end technological strength will greatly benefit from the explosion of mini LED demand.

  Sanan Integration: Layout of the compound semiconductor industry, and coordinated development of the four business sectors.

The company continues to lay out compound semiconductors and expand and build new projects to meet the growing demand for RF devices in the 5G environment in the future.

  At the same time, constant trade conflicts and the increasing emphasis on the localization of semiconductors in various countries, the company is expected to receive the dividends from the increased self-sufficiency rate of RF front-end devices.

Sanan Optoelectronics is a domestic leader in compound semiconductor replacement. It has made good progress in all aspects of radio frequency chips, optical communications and power electronics.

The company has achieved volume expansion since the fourth quarter, and the integrated circuit business is expected to achieve explosive growth in 2020.

  Earnings forecasts and investment advice.

It is expected that the net profit attributable to mothers will be 14 in 2019-2021.

400 million, 24.

300 million, 30.

800 million, corresponding PE is 56/33/26 times, giving the company 40 times PE in 2020, corresponding to a target price of 24 yuan, maintaining a “buy” rating.

  Risk warning: The price of LED chips is falling, and the demand for mini LED is less than expected.