The continuous research and development of Optical Technology has gradually grown into a leading provider of coal mine safety monitoring equipment and systems in China. Through epitaxial mergers and acquisitions, the company is forming a business pattern of coordinated development of three major business sectors: safety production monitoring equipment, military business and semiconductor precision processing equipment business.
The company is a leading supplier of coal mine safety monitoring equipment and systems in China. Founded in 1994, the company has developed into a leading supplier in the industry over the years, and uses technological advantages to expand its product line to the field of power production monitoring and environmental protection. As the coal industry rebounded and the company's business bottomed out, revenue and net profit increased by 9% and 27% respectively in 2016. Revenue and profit increased by 15% and 24% respectively in the first quarter of 2017.
The company attaches importance to research and development and promotes the development of the company with technological progress. The company invests at least 10% of its operating income in R & D every year, and its R & D personnel account for 41% of the total employees. Through technical advantages, the gross profit margin of the company's coal safety equipment and power production monitoring equipment is expected to remain above 65% and 55%.
The company actively distributes the field of semiconductor precision processing equipment. The company acquired 70% of Loadpoint Limited and Loadpoint Bearings Limited in 2016 and 2017 respectively, and entered the business of semiconductor precision cutting equipment and high-speed air spindle of cutting machines. With the policy promotion and rapid growth of market demand, China's integrated circuit industry is developing at a high speed. The company is expected to combine the technological advantages of overseas companies with the booming market demand in China to promote business development.
Acquire Changshu Asia, enter the field of military industry. In 2017, the company acquired 100% stake in Changshu Yabang by issuing shares and paying cash for 151 million yuan. Changshu Yabang is a military enterprise supporting pontoon bridge electric control system and training simulator. at present, type 4 pontoon bridge electric control system and type 2 pontoon bridge training simulator are finalized. The company has "weapons and equipment quality Management system Certification Certificate", "three-level Secret qualification Unit Certificate" and "equipment contractor Registration Certificate". Changshu Asia committed 15 million yuan, 17.75 million yuan and 19.75 million yuan in 2017-2019.
For the first time, it covers the "prudent recommendation-A" investment rating. We forecast that the operating income of the company from 2017 to 2019 is 176 million yuan, 228 million yuan and 263 million yuan respectively, and the earnings per share are 0.24,0.35,0.45 respectively. The company currently has a market capitalization of 2.885 billion, with a dynamic price-to-earnings ratio of 61.3 times in 2017. Optical Technology is a leading provider of coal mine safety monitoring equipment and systems in China, gradually expanding its business to the fields of power production monitoring equipment, semiconductor equipment and military industry.
Risk hint: coal and electricity market demand deteriorates, M & A business integration is lower than expected