I. Overview of events
Recently, Huaying Technology released its 2017 semi-annual report and July revenue report: 1) the revenue in the first half of 2017 was 2.115 billion yuan, up 8.85% from the same period last year; the net profit belonging to shareholders of listed companies was 70.7409 million yuan, down 82.21% from the same period last year; deducting 43.4934 million yuan from non-net profit, an increase of 173.02% over the same period last year; basic earnings per share was 0.0256 yuan, deducting non-earnings per share was 0.0157 yuan 2) plans to distribute a cash dividend of 1 yuan (including tax) to all shareholders for every 10 shares; 3) consolidated revenue of 394 million yuan in July, including 393.568 million yuan for module-related business and 435500 yuan for cover glass business.
II. Analysis and judgment
The results of the report are in line with expectations, the gross profit margin of the module business improved compared with the same period last year, and the expense rate decreased during the period 1. (1) the company's performance forecast: the net profit belonging to listed shareholders in the first half of 2017 is 55 million ~ 75 million yuan, and the basic earnings per share is 0.019990.0271 yuan. This performance falls into the upper forecast range. (2) the year-on-year growth rate of the two main businesses-module related business / cover glass business is 10.01%, 87.99%, 99.39% and 0.14%, respectively, and the gross profit margin is 18.60%, 3140.60%, and 2.33%, respectively. 2832.55 percentage points (3) during the reporting period, the company's comprehensive gross profit margin was 14.35%, up 1.58% from the same period last year; the expense rate during the period was 9.06%, down 2.45% from the same period last year. The sales expense rate, management expense rate and financial expense rate were 0.50%, 6.30%, 2.26%, 0.06%, 0.44%, and 1.95%, respectively.
2. The company's revenue in the second quarter increased by 16.68%, the comprehensive gross profit margin was 7.70%, an increase of 5.02% over the same period last year, and the expense rate during the period was 7.79%, a decrease of 4.53% over the same period last year. The sales expense rate, management expense rate and financial expense rate were 0.52%, 5.18% and 2.09%, respectively, and decreased by 0.09%, 2.73% and 1.71%, respectively.
3. The company's revenue in July increased by 13.21% compared with the same period last year, of which module-related business increased by 15.07%, while glass cover business decreased by 92.73%. The company's revenue from January to July increased by 9.40% compared with the same period last year, of which module-related business increased by 10.70%, while glass cover business decreased by 88.59%.
4. We believe that with the release of high-generation line production capacity of the domestic LCD panel industry, the company's module business is expected to benefit. The adjustment of the production line of cover glass business is coming to an end and will gradually contribute to income. Panel business is in mass production and will contribute revenue in the second half of the year.
The module factory is steadily improving, the cover glass production line is optimized and adjusted, and the panel project mass production will contribute to the income. 1. The module business sales in the first half of the year are the same as the same period last year, the price is slightly higher, the production line is further concentrated, and the production efficiency is further improved. Huaying Wujiang realized revenue of 335 million yuan and net profit of 52 million yuan; Huaying Optoelectronics now has revenue of 1.472 billion yuan and net profit of 214 million yuan; Fujian Huaxian realized revenue of 556 million yuan and net profit of 76 million yuan; Huaguan Optoelectronics realized revenue of 27 million yuan and net profit of-1.54 million yuan.
2. The first-phase production line of cover glass was adjusted in the first half of the year, with revenue of 3.01 million yuan, down 87.55% from the same period last year. The first production line of the second phase has been under construction and commissioning, and the second phase master glass and 3D cover glass have begun to send sample certification. It is expected that the production capacity of 3D glass will be released in the second half of the year and gradually contribute to profits.
3. The panel business is in the project construction period in the first half of the year, and will be produced on June 30, and is expected to contribute revenue in the second half of the year. We believe that with the continuous adjustment and optimization of the production line, the cover glass is expected to enter the stage of mass production and is expected to turn losses into profits. The gradual release of panel business capacity is expected to continue to generate revenue.
Third, profit forecast and investment suggestions
It is estimated that the EPS of the company from 2017 to 2019 will be 0.09,0.12,0.19 yuan respectively. Based on the flexibility of the company's performance growth, it can give the company 65-70 times PE in 2017, and a reasonable valuation of 5.85-6.30 yuan in the next 6 months, maintaining the company's "cautious recommendation" rating.
Fourth, risk tips:
1, the production capacity progress is not as expected; 2, the construction progress of the project is not as expected; 3, it shows that the market competition is intensified.
