Incident: The company recently released its 2017 mid-year report, achieving operating income of 174 million yuan, an increase of 12.43% over the previous year, and Guimu's net profit of 26 million yuan, an increase of 1.30% over the previous year. The basic earnings per share were 0.11 yuan, the same as the same period last year.
Performance can be expected to increase throughout the year, and grating sensing products have ushered in an explosion. The company achieved revenue of 174.1 million yuan in the first half of 2017, an increase of 12.43% over the previous year, and achieved steady growth in performance.
The traditional main product, optoelectronic measurement and control instruments, contributed 69.0887 million yuan in revenue, accounting for 39.68% of operating income, an increase of 0.85% over the previous year, and the revenue scale was almost the same as the previous year. Meanwhile, the grating sensing products developed by the subsidiary Yuheng Optics developed rapidly, contributing 70.9929 million yuan to operating revenue, accounting for 40.78%, a significant increase of 49.03% over the previous year. On the one hand, the explosion of grating sensor products is based on the background of the country's supply-side reforms, and the market demand for grating encoders has exploded. On the other hand, it is also inseparable from the company's strengthening of its quality control system and adapting to market demand.
Technological advantages lead the industry, and leading advantages in national defense optoelectronic measurement and control equipment are prominent. The company has strong technological innovation and new product development capabilities. On average, it launches more than 10 patents and new technologies and develops 2 to 3 new products every year. In particular, in the development and production of optoelectronic measurement and control equipment products for national defense, such as anti-tank missile television angle finders, optoelectronic latitude and longitude meters, etc., it has an absolute leading market share; at the same time, the company has dominated the upgrading and upgrading of domestic optoelectronic measurement and control instruments and equipment for national defense in terms of technology implementation and product production. The technology and experience that the company continues to accumulate in the field of optoelectronic measurement and control is bound to maintain the dominant position of the company's existing products and the leading position in the production of other optoelectronic measurement and control equipment products.
The controlling shareholder of the company is the Changchunguang Institute of the Chinese Academy of Sciences. Relying on the strong scientific research accumulation of the Institute of Optoelectronics, the company has achieved a leading position in the field of national defense optoelectronic instruments. Its main business is optoelectronic measurement and control instruments, which account for more than 30% of the domestic market; many equipment products have broken foreign monopolies and occupy almost the entire share of the domestic market, such as military television angle finometers.
Civilian and military products developed collaboratively, and the transfer of military to civilian products opened up a broad market space. The company mainly produces and sells complete optoelectronic measurement and control instruments for the national defense and military field. They are customized according to military customer orders, and are closely linked to national defense construction. As a result, they received strong support from the country. The company received strong support from the government, which included current profit and loss in the first half of 2017, amounted to 8,5877 million yuan. Production of civilian products is mainly carried out by subsidiaries. At present, the company's development in the civilian products market has achieved remarkable results. The subsidiary's operating indicators are good, and the revenue of grating encoders has increased dramatically in the first half of the year. Looking at the long term, the company's various businesses are expected to grow steadily in fields such as national defense, military industry, aerospace, etc., and where demand is strong in the civilian market, the company's various businesses will grow steadily, creating a good situation for coordinated development of military and civilian products.
Profit forecasts and investment recommendations. We expect the company's EPS for 2017-2019 to be 0.25 yuan, 0.27 yuan, 0.33 yuan, and the corresponding PE is 68 times, 65 times, 53 times, giving it an “increase in holdings” rating.
Risk warning. Orders for military goods have been greatly affected by the policy, and competition in the military to civilian products market has intensified.