Incident: The company recently issued a series of announcements, including the first-quarter performance forecast and cancellation of the “Electronic Glass Industrialization Base Project Investment Agreement”.
Key points of investment
On March 31, 2015, the company released its performance forecast for the first quarter of 2015, with an estimated loss of 28-38 million yuan. The main reason is that the Spring Festival holiday was affected by factors such as increased competition in the industry and falling product prices. Previously, the company announced its 2014 earnings report. In 2014, it achieved revenue of 2,839 million yuan, an increase of 96.66% over the previous year; realized net profit of -318 million yuan, with a profit of 80.64 million yuan in the same period last year. The main reasons for the loss were: 1. ATV Technology's profit did not meet expectations and confirmed a loss of 250 million yuan in goodwill; 2. During the reporting period, an impairment loss of 36 million yuan was calculated for fixed assets, and 23 million yuan was prepared for inventory price reductions. After deducting these one-time gains and losses, the company basically achieved break-even in 2014. We believe that in 2015, with the gradual implementation of the company's various tasks, the 2015 performance will usher in a rapid recovery.
On April 10, 2015, the company issued an announcement deciding to cancel the “Electronic Glass Industrialization Base Project Investment Agreement” (hereinafter referred to as the “Investment Agreement”) signed with the People's Government of Chibi City, Hubei Province (hereinafter referred to as the “Chibi Government”). On 2014/11/17, with the approval of the shareholders' meeting, the company changed the “Chibi Small and Medium Size Capacitive Touch Screen Production Line Project” to Changsha, terminated the implementation of the “Chibi Ultra Thin and Super Strong Cover Glass Production Line Project”, and permanently replenished working capital with the remaining capital raised from the above two projects. In the long run, the resolution will help the company concentrate superior resources and accelerate the company's development.
The company is facing greater operating pressure in the short term, but we believe that with the digestion of various adverse factors in 2014, the company's operations are expected to usher in a new turning point in 2015. We expect the company's EPS in 2015 and 2016 to be 0.53 and 0.68 yuan respectively, and the corresponding PE in 2015 is 52 times, which is in a low position in the electronic information industry; at the same time, the company's PB is only 3.39 times, far below the industry level. We believe that there are indeed some uncertainties about the company's performance, but the company's development opportunities in industrial mergers and acquisitions funds and the new electronics manufacturing industry are also gradually unfolding. The company was given a “careful recommendation” rating. For the time being, the company was given a target price of 31.8 yuan based on 60 times PE in 2015. I am optimistic about the company's rapid development in 2015 in the long term.
