Pacific: Gave Olaide a buy rating with a target price of $110.0

2022-03-28Pacific Securities Co., Ltd. Wang Lingtao, Opel conducted a study on Olaide and released a research report "OLED Organic Materials and Application Components Leader, Localization Replacement Trend", this report gave a buy rating to Olaide, believing that its target price is 110.00 yuan, the current stock price is 58.22 yuan, and the expected increase is 88.94%.

Allred (688378)

Introduction: Allred is a very typical high-tech materials enterprise, in the field of OLED organic luminescence and functional materials have a very deep achievement, but also specialized in the application of evaporation sources of key components of the evaporation machine, is the domestic OLED materials and application components segmentation field deserved leading enterprises. OLED industry in the past was basically monopolized by a small number of overseas companies, downstream terminals have been controlled by Samsung and other South Korean companies more than 90% of the share, in such a closed industry ecology, in the context of no overseas manufacturers support, domestic material process manufacturers have to step by step to explore their own. Olaide has not only successfully realized a large proportion of autonomous replacement of domestic panel factories for evaporation source components, but also increased its share in each panel factory year by year. At the same time, in the field of RGB organic luminescent materials and various OLED functional layer materials, the company's product development has been continuously promoted, and sales are also increasing year by year.

There is a view in the market that the growth of Olaide mainly relies on evaporation sources, and the growth will slow down as the domestic panel factory is gradually saturated. We think this view is very narrow: first of all, the growth space of the evaporation source is still very large, and the slowing view is very appropriate to describe it with a leaf barrier, which we will talk about later; secondly, Olaide is not only the evaporation source, the OLED market is large enough, thirty or forty kinds of organic materials in the global market space of nearly 10 billion, the share and discourse power of the panel factory in the downstream terminal field of the mainland are also gradually rising, in this context, the materials that Olaide can do will not be limited to RGB luminescent materials (even if it is only a luminescent material). , there are also several generations of different kinds of iterations), but will gradually break through in each functional layer and application layer. These breakthroughs will enable Olad's future revenue structure to gradually exceed the proportion of organic materials in evaporation sources, and then completely open the ceiling of growth.

The domestic AMOLED industrial chain has gradually improved, and the domestic replacement space is vast. In recent years, China's display panel shipments have climbed, according to CCID think tank data, as of 2020, China has built 13 AMOLED production lines, accounting for 52% of the global AMOLED production line. In 2023, the global AMOLED panel revenue reached 37.4 billion US dollars, the Chinese market size is about 84.3 billion yuan, and the compound growth rate from 2019 to 2023 is 9.74% and 46% respectively; it is enough to show that the domestic alternative space of the AMOLED industry is large enough, and China's growth rate is leading the world. Under the background of the increasingly fierce demand for cost reduction in downstream consumer electronics competition, AMOLED's domestic alternative has become the best choice for midstream panel manufacturers. However, due to the late entry of the mainland into the OLED industry, the voice in the two key areas of upstream materials and equipment is weak, and the relevant technologies and patents have been monopolized for almost a long time in the hands of overseas enterprises such as Korea, Japan, Virtue and Virtue.

The mainland relies heavily on imports. Therefore, improving the localization of the upstream materials and equipment of the mainland OLED is an inevitable choice for improving the health of the industrial chain. As a local head enterprise with the ability to prepare organic luminescent materials and mass produce evaporation sources, Allred is expected to further expand its market share in the boom of DOMESTIC SUBSTITUTION of OLED and consolidate its leading position on the road of strong Hengqiang.

The evaporation source maintains the foundation of the company's high growth, and the organic material continues to expand and expand the growth margin:

1. Evaporation source breaks the international monopoly and ushers in a period of high-speed growth. Organic luminescent materials are heat-sublimated by a distillation process to form a film on the substrate. The evaporation source is the "heart" part of the evaporation machine, the key equipment in the evaporation process, and the current global major suppliers are South Korea YAS, SNU, Japan's Aefarco and China Olaide, the company is the only linear evaporation source Chinese manufacturers. By the end of 2020 and the beginning of 2021, the total production capacity of the 6-generation AMOLED production line planned/under construction in China is about 354,000 pieces per month, and the estimated demand for evaporation source components in these years is about 472 sets. Based on the average sales unit price of about 4.43 million yuan / set of evaporative sources in the past few years, the market size of China's evaporation sources is about 2.1 billion yuan, and if new AMOLED production line investment is landed in the future, the evaporation source market size will continue to grow.

2. RBG luminescent material occupies the first-mover advantage and is a solid foundation for future advancement. Organic luminescent materials account for 12% of the cost of OLED panels, which is one of the sub-sectors with the highest technical barriers in the industrial chain. In order to meet the optimal luminous efficiency, best performance and high yield of the panel, organic luminescent materials from raw material selection and research and development, production process to manufacturer certification and a series of links, manufacturers need to invest time, capital cost is quite high. Compared with the production of most domestic OLED material manufacturers focusing on the production of front-end materials and intermediates, Allaide not only realizes the mass production of terminal materials with the highest technical barriers, but also has the research and development and production capacity of various functional layer materials of OLED. Olaide adheres to the market-oriented, self-research as the driving force, and actively reserves the next generation of luminescent material technology; while accelerating the expansion of production capacity, it is expected that the new terminal material production line in Shanghai will reach production in 2023, and it is expected to increase the production capacity of 10,000kg/year, which will lay a solid foundation for the continuous growth of organic luminescent materials for the company in the future.

3. Continuously extend and innovate around OLED organic materials, and continuously expand its territory in the field of key materials such as thin film encapsulation and PI film. Thin film encapsulation material is an important material for isolating poor contact with water vapor after evaporation of organic luminescent pixels, improving luminous efficiency, and prolonging the luminous effect and life of devices. Pi film has a wide range of applications in flexible substrates and AMOLED light-emitting panels, and these two products have been achieved under the company's years of research and development. In addition, in recent years, the company has completed the research and development and mass production of a variety of OLED organic luminescence and functional key materials, and has gradually entered the supply growth period. With the full support and collaboration of domestic AMOLED panel companies, under the long-term reserve and accumulation of its own organic luminescent materials, functional layer materials, packaging materials, substrate materials, and even barrier materials, it is able to continue to expand its coverage in emerging organic material categories around the OLED industry, and such continuous innovation and development will provide strong support for the company's future growth.

Profit forecast and rating: We are optimistic about the company's continuous breakthrough and advancement space in the field of OLED organic luminescence and functional materials, and firmly believe that the growth bottleneck of evaporation sources is not at present, and there is a very clear upward channel. After more than a decade of technology accumulation and industry breakthrough, at the moment when the production capacity of AMOLED in the mainland panel factory continues to increase and the voice is constantly increasing, Olaide has a good growth opportunity to break the substantive monopoly of overseas enterprises on the OLED supply chain. Evaporation source components from the breakthrough monopoly to be used by domestic panel companies a large share, is only the company's first step in the growth process, organic luminescence and functional materials continue to promote and apply to cut, the face of greater space, and the demand for localization substitution is also more intense, similar the second step, the third step will be sonorous and powerful into the future growth, we estimate that the company's profit in 2021-2023 will be expected to reach 137 million, 235 million, 371 million, The corresponding valuation of the current market capitalization is 32.05, 18.64 and 11.82 times respectively, and the company is given a buy rating.

Risk warning: (1) the progress of cooperation and development between the company and the downstream panel factory is not as expected; (2) the overseas material monopoly enterprises have restricted and sued the company in some special patent layouts; (3) the downstream consumer electronics and various display terminal industry applications are affected by negative factors such as the economy and the epidemic, resulting in less than expected demand; (4) the company's own technology upgrading and iteration cannot follow up the market demand, which may lead to a decline in competitiveness and market share.

According to the research report data released by Securities Star Data Center in the past three years, the team of researchers Lu Hao of CITIC Construction Investment Securities has studied the stock more deeply, with an average forecast accuracy of 54.32% in the past three years, and its forecast for the net profit attributable to 2021 is 173 million yuan, and the forecast PE is 24.6 according to the current price.

The latest profit forecast breakdown is as follows:

The stock has had 2 ratings and 2 buy ratings in the last 90 days, and the average target price for institutions in the past 90 days has been 94.33. The Securities Star Valuation Analysis Tool shows that 688378 company is rated 3 stars, good price is rated 1.5 stars, and valuation is rated 2.5 stars. (Rating Range: 1 ~ 5 stars, maximum 5 stars)

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