Release the 2012 annual report-the first quarterly report of 2013, the company's performance is in line with expectations. The company announced that its operating income in 2012 was 1.007 billion yuan, an increase of 18.60% over the same period last year; the net profit of shareholders belonging to listed companies was-125 million yuan, down 700.93% from the same period last year; and the latest equity diluted EPS=-1.70 yuan per share. The company achieved 347 million yuan in revenue in the first quarter of 2013, a sharp increase of 107.16% over the same period last year. The net profit of shareholders belonging to listed companies was 2.56 million yuan, compared with a loss of 6.6 million yuan in the same period last year, and a loss of 55.71 million yuan in the fourth quarter. The company has successfully reversed its losses in the first quarter of this year. The company's 2012 annual report results and the first quarter of 2013 results are in line with our previous expectations.

In 2012, the company's touch screen business division "run-in period" led to a sharp decline in performance. In 2011, based on the optimistic demand for consumer electronics, the company began to adjust the business layout, integrating touch screen panels, touch screen modules and cover glass business to form a vertically integrated layout of the industrial chain, while increasing investment in touch screen production lines. In 2012, the company was basically in the "running-in period" of product research and development, production line debugging and team building, resulting in poor overall business results. In addition, the actual implementation rate of the 2.3 billion yuan supply framework agreement signed with ZTE at the beginning of 2012 was only 24.35%, or 564 million yuan, resulting in a significantly lower revenue scale than expected. however, the large-scale fixed capital investment in the early stage of the product line, the increase in personnel and the increase in expenses during the period led to a sharp increase in operating costs, resulting in a sharp decline in the company's performance in 2012.

The company achieved a turnaround in the first quarter, and the company successfully broke through the break-even point. Electronic touch manufacturers invest a lot of money in the early stage, and the key factors affecting business performance are yield, capacity climbing and product introduction. after the "running-in period" in 2012, the company has turned losses into profits in the first quarter of 2013 on the basis of a loss of 55.71 million yuan in the fourth quarter of last year. Its important significance lies in that the company has made a major breakthrough in capacity climbing and yield improvement, and the company has successfully broken through the break-even point.

The touchscreen industry is booming, and the company will see a substantial increase in performance in 2013. Consumer electronic products will maintain rapid growth in 2013. From the overall point of view of the touch screen industry, driven by consumer electronics demand and increased touch screen penetration, shipments will continue to grow at a higher rate of certainty. From the perspective of touch screen demand structure, the demand for OGS screen in 2013 is a high probability event. Considering the demand of ultrabooks, tablets and smartphones, we estimate that the demand for OGS touch screen will reach 317 million in 2013, an increase of 502% over the demand of 53 million in 2012. The touch screen industry is highly prosperous. From the company's point of view, after the completion of yield improvement and capacity climbing in 2013, the overall revenue will increase exponentially, and the company's vision in 2011 is expected to enter the harvest period this year after running-in in 2012, fully enjoying the high demeanor of the industry. the big turnaround in the first quarter gives us reason to believe that the company will achieve substantial growth in 2013.

Maintain the "overweight" rating. Benefiting from the changes in the downstream consumer electronics demand structure, the OGS solution ushered in a good opportunity for development. We are optimistic about the growth potential of the company's touch screen products, and are expected to achieve earnings per share of 0.81 yuan and 1.18 yuan in 2013-2014. The current stock price corresponds to 27 times PE in 2013 and 19 times PE in 2014. The advantage of the integration of the company's industrial chain is conducive to coordination and integration, improve efficiency and reduce costs. The turnround and rapid growth in 2013 has been preliminarily confirmed, and the future growth is worth looking forward to.