The performance of the China report is close to the upper limit of the forecast, and the Q3 performance guidance exceeds expectations.
The company released a mid-17-year report that revenue in the first half of the year was 574 million yuan, an increase of 25.3% over the same period last year, of which revenue from LED chips and epitaxial wafers was 554 million yuan, up 81% from the same period last year. The net profit of returning home in the first half of the year was 102 million yuan, an increase of 1748.59% over the same period last year, which was much higher than that of blue-green LED in the same period last year, and was close to the upper limit of the previously predicted range of 0.975-102.5 million yuan. The net profit of 17Q2 deducted from non-return in one quarter was 46.5 million yuan, a sharp increase of 40.48% from the previous quarter. The company expects to achieve a net profit of RMB 1.47-153 million from January to September this year, an increase of 553.75% Mel 580.43% over the same period last year, corresponding to a net profit of RMB 4520.35-51.2035 million in a single quarter of Q3, an increase of 57.72% PF 78.66% over the same period last year, exceeding market expectations.
Blue and green light has entered the harvest period, the level of gross profit margin has been greatly improved, and the red and yellow light bibcock is about to fly. 17H1's chip production capacity is about 2.9 million pieces (2 inch chips), the output is 2.6 million pieces, the capacity utilization rate is about 89%, and the inventory is 3.41% lower than the same period last year. Considering the impact of Q1 Spring Festival and the blue and green production capacity continued to climb the slope, the company's capacity utilization situation is full, and the tight supply and demand situation in the industry is evident. After completing the investment, debugging and climbing of blue-green production capacity, the company's gross profit margin has rebounded rapidly since 16 years. 17H1's gross profit margin of its LED epitaxial chip business reached 36.23%, an increase of 20.33pct over the same period last year. Q2 single-quarter sales gross profit margin of 38.46%, month-on-month increase in 7.23pct, higher than the low point of 15Q4 30.5pct.
As we emphasized in our first coverage report, at the development stage of the company's focus on red and yellow light products, its sales gross profit margin was once ahead of San'an and long-term ahead of Huacan, with a maximum of 51% and outstanding profitability.
Good pace of production expansion, strong will, aiming to become a full-color LED leader in 17 years domestic LED chip manufacturers focus on blue and green light expansion, of which a certain proportion of the application of input will bring red and yellow light capacity matching demand, the company announced in May to invest 737 million yuan to add 20 sets of red and yellow light MOCVD equipment, 18Q1 red and yellow light production capacity is expected to double, the leading position is stable. In terms of blue-green light, after nearly two years of experience in mass production, the company announced on July 17 that it planned to invest 5 billion yuan to build a blue-green chip production base in Nanchang, with an investment of 2.5 billion yuan in the first phase and a monthly output of 600,000 pieces. in order to promote the expansion project, the company announced the establishment of a wholly-owned subsidiary, Jiangxi Qianzhao, and announced on August 9 that the registered capital of Jiangxi Qianzhao would be increased from 300 million yuan to 2 billion yuan. 19H1's blue-green light production capacity is expected to double. Implement the strategic goal of the leading enterprise of panchromatic LED.
Optimistic about the steady profitability of red and yellow light, blue and green light broad market space, to maintain the buy rating company as the domestic LED red and yellow light leader for a long time, the production capacity accounts for about 11% of the world, accounting for more than 30% of the domestic, strong scarcity and good competition pattern. At the same time, based on the policy certainty of the LED lighting market created by the 13th five-year Development Plan of the semiconductor lighting industry, we are optimistic about the profitability of the company's blue and green light production capacity. Maintain the 2017-19 homing net profit forecast of 182 million yuan, 310 million yuan and 388 million yuan, with a target price of 11.01 yuan and 13.21 yuan.
Risk hint: the progress of new capacity investment is lower than expected, and the number of entrants in the field of red and yellow chips increases.
