The core assumption of risk: the LED downstream applications development is lower than expected, the on-line detection device of lower than expected sales of the progress of research and development of new products, lower than expected, the gem system risk.
Detection equipment on-line detection and color layout to bring sustained growth space and power to the company. Online detection equipment to directly face the production testing requirements of LED manufacturing enterprises, the market capacity is huge compared to laboratory testing equipment.
According to estimates, LED online detection equipment market capacity is expected to reach 5000000000 yuan. At present the company has realize online detection equipment sales, the future will be sustained and rapid growth. Strategic product placement can bring sustained growth space and power to the company. While the color detection equipment is currently in the development stage, we estimated that 2 years after the color detection equipment for the company contribution.
An important strategy for the future extension type is company M & A. From the financial strength and capital utilization point of view, we believe that the company has the ability and willingness to continue to identify suitable acquisition targets, achieve the company scale and rapid growth of the performance. The company acquired advanced photoelectric although failed but has shown that the extension and expansion of the strategic intention of the company.
Development of maximizing the core technology R & D capability, excellent management ability and executive force, stable management team of Surety Company benefit from the industry.
The first cover given buy rating: we expect the company 14-16 EPS 0.97,1.12,1.38 yuan, corresponding to 2014-2016 years of PE for 27.4X, 23X, 19X, as the industry leader, has a relatively wide moat, and the business of industry of space is also expanding, so there can be higher premium valuation. We believe that the company 6 months a reasonable valuation of the corresponding 2014 35 times PE, giving the company 6 months target price of 33.95 yuan, the first time to give a "buy" rating.