Investment suggestion

We predict that the EPS of the company from 2017 to 2019 is 0.10,0.16 and 0.23 yuan respectively, and the corresponding PE is 214,134,93 times respectively. The company's semi-annual results in 2017 are in line with expectations, revenue and net profit have increased, traditional peripheral business continues to pick up, robot business is still developing rapidly, and revenue from drone business has declined due to the company's conservative strategy. The company still has a deep foundation in the computer peripherals business and has obvious advantages in the 3C automation business, and may continue to promote the company's performance in the future. Maintain the recommended rating.

Main points of investment

The performance was in line with expectations, and revenue and net profit increased: in the first half of 2017, the company achieved operating income of 288 million yuan, an increase of 12.57% over the same period last year; the net profit attributed to shareholders of listed companies was 16.27 million yuan, an increase of 20.07% over the same period last year. Performance growth mainly benefited from the steady improvement of peripheral business, the optimization of management system and sales strategy, and the reduction of expense rate. In the first half of the year, the company's sales gross profit margin rebounded from last year to 27.80%, compared with 26.32% for the whole of last year, mainly due to the increase in gross profit margin of peripheral products. In terms of expenses, the sales expenses were 39.92 million yuan, an increase of 7.39% over the same period last year, and the management expenses were 27.83 million yuan, a sharp decrease of 41.50% over the same period last year, mainly due to the reduction of UAV R & D expenses and share payment fees. The financial expenses were-5.91 million yuan, an increase of 50.21% over the same period last year, mainly due to exchange rate changes. In terms of cash flow, the operating net cash flow was-3.1 million yuan, an increase of 91.37% over the same period last year, mainly due to the reduction of large expenditure-related payments in the current period, while the net cash flow of investment was 40.94 million yuan, an increase of 119.14% over the same period last year, mainly due to the different expiration dates of the financial products purchased.

Peripherals continue to pick up and expand new businesses such as intelligent manufacturing: the company's traditional peripheral business continues to pick up, with revenue of 265 million yuan, an increase of 15.84 percent over the same period last year, and a gross profit margin of 28.02 percent, an increase of 0.43 percent over the same period last year. Based on the previous accumulation, the company gradually optimizes and adjusts the product structure of peripherals, strengthens product micro-innovation, and actively launches popular style products that fit the market; in addition, it further strengthens channel construction, complements each other online and offline, increases efforts to open up offline sales channels in third-and fourth-tier cities, and strengthens market research and research to make product and technology R & D reserves guided by market demand. In addition, the company continues to expand the development of intelligent manufacturing and other emerging businesses. Robot business with the help of the company's early integrated system business, in-depth understanding of more than 30 sub-manufacturing areas of the 3C industry, further promoted the research and development of flexible standardized equipment, and gradually established technical and product barriers. In this period, the robot integration business is still growing rapidly, with revenue of 3.67 million yuan, an increase of 40.99% over the same period last year. In terms of UAV business, due to multiple factors, the company generally adopted a steady and conservative strategy and continued to make product technology reserves, with revenue of only 16.99 million yuan, down 19.82% from the same period last year.

Computer peripherals have profound background, and 3C automation business has obvious advantages: the company started from the research and development, production and sales of computer peripherals such as keys and mice, with first-class industrial design and high-quality manufacturing technology, so far, the products have been sold to more than 50 countries and regions around the world, and form a complete sales system online and offline, which is profound in the main business of traditional peripherals, and still has a very strong strength. In addition, in the face of the huge market space of intelligent manufacturing, the company provides its own more mature solutions as an independent business and transforms into an external professional intelligent manufacturing system solution provider, committed to upgrading and transforming China's traditional manufacturing industry, and promoting it to enter the development of information, intelligence, digitalization and automation as soon as possible. Now it is mainly focused on the 3C industry. Has provided professional services for a number of large 3C manufacturing enterprises. The company benefits from many years of experience in manufacturing automation applications, in-depth understanding of the process process, obvious advantages in 3C automation business.

Risk hint: the drone business continues to be in the doldrums, while the 3C automation business slows down.