Incident: The company announced its 2009 full-year performance report today, stating that it achieved revenue of 272,7721 million yuan in 2009 and realized net profit attributable to owners of the parent company of 3,843.05. An increase of 12% and a decrease of 3%, respectively, over the same period of the previous year.
The company's revenue growth rate was slightly lower than expected, and the contribution came mainly from flash memory products.
The company's revenue in 2009 was 272.7721 million yuan, slightly lower than our expectations of 291 million yuan. Net profit was 384,035 million yuan, lower than our expectations of 41.64 million yuan. Among them, flash memory products still contribute the most to revenue. In the context of the recovery of the computer hardware industry in 2010, the computer peripheral products industry will also enter a boom cycle. As the current mainstream mobile storage devices, most of them are based on flash memory technology. However, the company has been operating in this field for several years, and is one of the companies with core USB technology in the world. The vast majority of flash memory products use USB as a standard interface, and demand is extremely high.
The slowdown in the growth rate of patent operations is dragging down overall performance, and we are still optimistic about this business in the future.
We believe that the main reason the company's revenue growth rate was lower than expected is that the revenue growth rate of the patent licensing business was lower than previously determined. However, we continue to stick to our previous view that the company's share of patent licensing revenue will continue to rise over the next few years. Considering that the company was busy going public in 2009, patent litigation will affect the company's listing process. It is expected that in 2010, after the company's successful listing, the company will have the energy and capital to defend its patent rights. At the same time, the company's successful lawsuit against PNY will help the company carry out patent operations in the future.
Furthermore, the price of flash memory materials rose quite a bit in 2009, and the company failed to adjust product prices in a timely manner, causing a decline in gross margin, which also had a certain negative impact on the company's profitability. It is expected that in 2010, with the price adjustment of flash memory products and the correction in raw material costs, the company's profit margins q currently account for relatively small patent operating income, and the future development pattern of the company will be divided equally between product revenue and patent revenue.
Patent operations are highly attractive because of their extremely high gross margin. However, it is necessary for companies to have an accurate judgment on the future direction of technological development. Currently, world-famous IT companies are actively developing patent operation business. For example, IBM, Intel, and Qualcomm all have dedicated patent operation teams to carry out patent development and operation activities. The first-mover advantage in this area is clear. Once a company has mastered the core technology of a product, it has exclusivity with other R&D teams, so it can obtain excessive benefits from patents. Currently, Lanco Technology has most of the core technologies in flash memory products, and has laid out the core technologies in next-generation storage devices such as solid-state drives. It is the company with the highest number of solid-state drive patents after Intel. We are optimistic about the future development prospects of the company. The next 3 years will be a period of rapid development for the company.
Maintain the company's “buy” rating. Based on the latest disclosed data, we adjusted the company's profit forecast, but did not change our judgment on earnings for 2010 and 2011. According to estimates, the EPS from 2009 to 11 was 0.77, 1.01, and 1.37 yuan, respectively. According to the current stock price, the corresponding PE for the next 3 years is 57, 44, 32 times. Give a “buy” rating. The main risk comes from the risk of fluctuations in raw material prices and the risk of technical deployment failure.
