The concept of metaverse was hyped by capital, the share price of Lianchuang electronics continued to reach a new high in the year, and shareholders also started intensive reduction. On the evening of November 25, Nanchang Guojin, a shareholder of Lianchuang electronics, plans to reduce its shares of the company by no more than 10.628 million shares, accounting for 1% of the total share capital. Prior to this, Nanchang Guojin had reduced its holdings of 15.945 million shares, accounting for 1.50% of the total share capital at the time of reduction. In addition, the controlling shareholder Jiangxi Xinsheng and those acting in concert reduced their holdings of 11453600 shares, accounting for more than 1% of the total share capital.
From a fundamental point of view, the performance of Lianchuang electronics has fluctuated and declined in recent years, which is difficult to support such a high valuation. Since 2017, its performance has been in a state of fluctuation and decline, and there are significant signs of “increasing income without increasing profit”. The competitive pressure in the industry where Lianchuang electronics is located intensifies, and the gross profit margin continues to decline. In the middle of 2021, the gross profit margin of touch display, optical components and other businesses is close to “halving”.
The market demand for 3C products is still growing, but the growth rate is significantly lower than that in previous years. Lianchuang electronics is developing vehicle business. Adas / automatic driving technology requires camera as the front basic hardware, so as to promote the market demand for on-board camera. Lianchuang electronics has the first mover advantage in the automatic driving camera and has obtained the certification of most head automatic driving solution providers. Can it rely on the vehicle business to fight a “turnaround”?
Under the speculation of metaverse concept, shareholders intensively and accurately reduce their holdings
Recently, metaverse concept stocks have been hyped by capital, and the sector has continued to reach a new high. According to the data of Dongfang fortune choice, since early September, the cumulative increase of metaverse concept (bk1009) has reached 51.93%, with an increase of more than 30% in the past month. As a provider of optical cameras, Lianchuang electronics has AR / VR lenses, which has also become a metaverse concept stock.
At the beginning of September, the lowest share price of Lianchuang Electronics was 15.45 yuan / share, and the subsequent fluctuation rose, up to 24.60 yuan / share, with a cumulative increase of 59.22%. Under the continuous rise of share price, Lianchuang electronic shareholders intensively started accurate reduction.
On the evening of November 25, Nanchang Guojin, a shareholder holding more than 5%, planned to reduce its shares of the company by centralized bidding, accounting for no more than 10.628 million shares, accounting for 1% of the total share capital of the company. The next day, the secondary market of Lianchuang electronics opened weaker and closed down 3.99%.
This is not the first reduction of Nanchang Guojin this month. As early as November 1 and 2, Nanchang Guojin reduced 15.945 million shares of Lianchuang electronics through block trading for two consecutive trading days, accounting for 1.50% of the total share capital of the company at the time of reduction. According to the secondary market price at that time, Nanchang Guojin cashed out about 319 million yuan.
The daily financial report noted that as of November 26, Nanchang Guojin held 72.0429 million shares of Lianchuang electronics, accounting for 6.78% of the total share capital. Among them, the shares involved in refinancing and lending business are 10 million shares, which will be returned on December 6, 2021.
In addition to Nanchang Guojin, Jiangxi Xinsheng, the controlling shareholder, and Jinguan international, the person acting in concert, also continued to reduce their holdings. Among them, Jiangxi Xinsheng reduced 6 million shares of the company through block trading on November 4, accounting for 0.56% of the total share capital; From June 21 to July 19, Golden Crown International reduced its holdings of 5.45357 million shares by means of centralized bidding, accounting for 0.51% of the total share capital of the company at the time of reduction.
After the reduction, Golden Crown International will no longer be a shareholder of Lianchuang electronics. Therefore, Jiangxi Xinsheng, Jinguan international and their persons acting in concert signed the agreement on dissolving the persons acting in concert on November 3.
The performance is “increasing income without increasing profit”, and the main gross profit rate is close to “halving”
The stock price of Lianchuang electronics continued to rise, mainly because the concept of metaverse was hotly speculated in the capital market, but the fundamentals were difficult to support the valuation. As of November 26, the dynamic P / E ratio of Lianchuang electronics had reached 93.79 times, and that of TTM was as high as 164.73 times. The share price was obviously overvalued. Under the high valuation, the performance of Lianchuang electronics has fluctuated and declined in recent years.
From 2018 to 2020, Lianchuang electronics achieved revenue of RMB 4.802 billion, RMB 6.082 billion and RMB 7.532 billion respectively, with a year-on-year increase of – 4.99%, 26.65% and 23.84%; The net profit was 245.7 million yuan, 259.6 million yuan and 164.4 million yuan respectively, with a year-on-year increase of – 13.40%, 5.66% and – 36.68%. By the first three quarters of 2021, its performance had further declined, and the growth rates of revenue and net profit were 25.89% and – 10.24% respectively.
From the above historical data, it can be seen that Lianchuang’s revenue continues to grow, but the growth rate of net profit fluctuates and declines, and there is differentiation between revenue and profit. As a result, the decline of gross profit margin of main business is an important reason.
The daily financial report notes that Lianchuang electronics is engaged in the R & D, production and sales of products such as optical lens, camera module and touch display integration. It mainly supports smart phones, tablet computers, sports cameras, intelligent driving, smart home, VR / AR and other products in the market.
The semi annual report of 2021 shows that the sales revenue of touch display business accounts for 48.86% and that of optical components business accounts for 20.97%. The revenue of the two businesses continued to grow, but the gross profit margin was close to “halving”. In the same period, the gross profit margin of touch display business was 6.66%, a decrease of 7.24pct compared with 13.90% at the end of 2020; The gross profit margin of optical components business was 17.96%, a decrease of 9.02pct compared with 26.98% in 2020. In this regard, Lianchuang electronics explained that the company’s product structure has been adjusted in recent years.
The daily financial report also found that Lianchuang electronics is highly dependent on key customers, and its sales to the top five customers account for more than 60% all year round, which lays a lot of risks for its future development. From 2018 to the middle of 2021, its sales to the top five customers accounted for 60.39%, 65.35%, 69.98% and 62.77% respectively.
“The cover of the front car is a lesson for the rear.”. As the head enterprise of touch and optical products, oufeiguang also has a serious dependence on large customers. After Apple’s mobile phone excluded the supply chain and Huawei’s mobile phone orders fell, its performance fell sharply and the secondary market collapsed.
Can the vehicle business improve performance?
With the rise of new forces in vehicle manufacturing, new energy vehicles have become the development trend in the automotive field, and ADAS / automatic driving technology has also developed rapidly. Adas / autopilot needs to take the camera as the front hardware foundation, which brings a broad market space for HD vehicle lens. Public data show that the global market scale of car cameras is expected to grow from 17.6 billion in 2020 to 123 billion in 2030.
From the perspective of technical solutions, a complete ADAS system needs to include 6 cameras, including 1 front view, 1 rear view and 4 look around. There are more than 8 cameras for high-end intelligent electric vehicles. There are 5 to 8 cameras in the mainstream L2 / L3 ADAS solution in the domestic market. It is expected that there will be more cameras in the L4 / L5 solution.
Lianchuang electronics has aimed at the vehicle camera market and used all the raised funds originally planned to be invested in the “industrialization project with an annual output of 260 million high-end mobile phone lenses” in the “industrialization project with an annual output of 24 million smart car optical lenses and 6 million image modules” to accelerate the development of vehicle optical lens projects and rapidly expand the production capacity of vehicle lenses.
Adas camera requires higher performance, and aspheric glass is a necessary component of high-end vehicle camera. The production capacity of Lianchuang electronics ranks second in the world in terms of aspheric glass, and has a certain first mover advantage for autonomous driving cameras.
From the perspective of competition pattern, the shipment volume of Shunyu car camera occupies an absolute advantage, and the market share will reach 51% in 2020. However, Shunyu car camera is mainly used in traditional fuel vehicles, and the proportion of ADAS lens is very small. The Lianchuang electronic vehicle camera is mainly used in ADAS, but the shipment is very small, and the high-end lens is only supplied to Tesla, Weilai, etc. on a small scale.
Lianchuang Electronics was hyped by capital due to the metaverse concept, but its performance development was unsatisfactory, the valuation was obviously high, and the shareholders also took the opportunity to accurately reduce their holdings. The gross profit margin of its touch and optical business decreased significantly, resulting in “increasing revenue without increasing profit”. Under the slowdown of 3C consumer electronics demand, can it improve its weak performance by vigorously developing its vehicle business?