Event: in the first half of 2020, the company achieved operating income of 1.194 billion yuan, an increase of 4.67% over the same period last year, a net profit of 107 million yuan, a decrease of 38.99% over the same period last year, and a non-return net profit of 69 million yuan, a decrease of 56.29% over the same period last year.
There are a lot of external difficulties, firmly asceticating internal skills. From the third quarter of 2020 to the second quarter of 2021, it was four quarters with relatively difficult external environment for the company. The original core customers of the company experienced a sharp decline in mobile phone shipments due to trade frictions between China and the United States. In the second quarter of this year, there was a global "chip shortage", which had a serious impact on smartphone production and shipments. Android brands can be said to have experienced the worst first half of the last six or seven years. ODM/EMS companies have also been hit, which also hinders the pace of Guanghong's recovery. In the face of the complex external environment, the company insists on penance and completes the adjustment of customer structure, the development of new business and the expansion of production capacity, which lays a good foundation for realizing the inflection point of performance.
The adjustment of customer structure has been completed, and the new downstream expansion is smooth, waiting for the shipment volume of new customers to rise. Since the third quarter of 2020, the company has been introducing incremental orders for new mobile phone customers to make up for the lack of existing key customers, and now it has successfully completed the introduction in the direction of customers and products such as XIAOMI, OPPO, Samsung, and New Glory, thus, the company has got rid of the short-term dilemma of the original lack of major customer share, and the customer structure has been optimized. Mobile communication industry observation data show that Glory domestic smartphone sales reached 4 million in July, ranking third in sales, with a strong growth trend. In the third quarter, the smartphone industry will enter the traditional peak season, the problem of shortage of materials in the supply chain is gradually improving, and the shipping status of Android models is expected to return to a relatively normal state. and this is the bottom reason why the company's current orders are full and the stock is active. Therefore, the company is expected to usher in a performance inflection point in the third quarter. In the future, the shipments of new customers will continue to grow and the release of new capacity will be superimposed. Will push the company into the track of sustained growth.
At the same time, while the company continues to focus on smartphones, it is also expanding into areas such as smart wear, smart home, notebook computers and automotive electronics, especially in the automotive electronics end. The company has obtained the qualification of Valeo, a supplier of auto parts. In short, as the leading EMS company in China, the future market and growth of the company will not only be limited to smartphones, but are expected to blossom more.
The fixed increase project will be put into production to lay down the room for future capacity improvement, and increase the overseas layout to focus on emerging markets.
The landing of the company's IPO investment project helped the company achieve high revenue growth in 2019. In 2020 and the first half of 2021, due to the negative impact of the downstream mobile phone industry, the production capacity growth rate did not reach the ideal state. Fortunately, the smooth introduction of new customers and the release of follow-up orders are expected to help the company increase its production rate to its previous peak. The launch of the planned additional investment project (starting from the second quarter of 2021) will provide a clear capacity guarantee for the company's future growth.
In addition, the company's existing mobile phone customers attach great importance to the emerging markets in Southeast Asia. In order to meet the global needs of customers and provide customers with local production capacity, the company actively arranges overseas factories:
With the continuous improvement of Guanghong production capacity in India, the Bangladesh plant has entered the preparatory stage, and the Vietnam plant is planned and built, the global production capacity layout is expected to become one of the important driving forces for the company's future growth.
Earnings forecast and rating: upgrade the company's rating to buy. Since listing, the company's production capacity has expanded in an orderly manner, which provides sufficient driving force for the steady growth of performance. The construction and commissioning of the third phase of the project will support the sustained growth of future performance. We expect the company's net profit from 2021 to 2023 to be 389 million, 586 million and 761 million yuan respectively, and the current stock price corresponding to PE is 22.27,14.78 and 11.40 times respectively. Considering the arrival of the turning point of relay growth in the second half of the year, the company's current stock price is 22.27,14.78 and 11.40 times respectively. Upgrade the company to buy.
Risk tips: (1) the deterioration of Sino-US relations has led to a sharp decline in smartphone shipments from key domestic customers; (2) the penetration of 5G smartphones to the middle and low end is not as expected; and (3) the construction and follow-up climbing progress of the company's additional projects is not as expected.
