Summary of the report:
The performance is steady and the product shipments are in line with expectations. 2017H1's revenue and performance were robust, with revenue of 518 million yuan, an increase of 1.06% over the same period last year, and net profit of 117 million yuan, an increase of 47.40% over the same period last year. In the case of the decline in the overall demand of the electricity meter industry, the company shipped a total of 240000 watt-hour meters in the first half of the year, and the terminal / medium voltage carrier shipped more than 90, 000 units, basically in line with expectations.
Focus on the main business and expand diversified products. The company is the leading enterprise of power carrier module, and has been committed to the application and promotion of carrier communication technology in national smart grid and other fields for a long time. At present, the company's main products are expanded from a single low-voltage power line carrier communication module (including chips) to watt-hour meters, distribution automation equipment, fire electronic alarm systems and so on. Among them, Dingxin Fire, a wholly-owned subsidiary, is committed to the design, research, development, production and sales of fire alarm products such as fire alarm, intelligent evacuation and power system alarm lights, with sales of 20.122 million yuan in the first half of the year and signing market intention orders of more than 56 million yuan. Shanghai Yinqi, a wholly-owned subsidiary, is mainly engaged in technical services and technical development in the field of integrated circuits, with revenue of 51.1795 million yuan and net profit of 10.5315 million yuan in the first half of the year.
The investment in R & D is increased, and the product line is gradually extended. 2017H1 continued to increase its R & D investment, with R & D expenditure of 71.2149 million yuan, accounting for 10% of revenue, an increase of 69.33% over the same period last year. The company independently developed three-phase zero-crossing spread spectrum modulated power line carrier communication technology, Dingxin communication low-voltage power line carrier routing algorithm and other technologies are in the domestic advanced level. In addition, based on the existing products, the company extends the product line in many directions, in which chip products deeply develop smart meter complete sets of chips and terminal MCU, and add "board-level circuit chip" integrated circuit products; carrier communication products have developed watt-hour meters, medium voltage carriers, operation and inspection systems and SVG equipment and other products. Non-polar bus technology products are based on self-developed bus communication technology to carry out application research and development in the field of fire protection. At present, the types of fire alarm products are relatively complete.
Profit forecast and investment advice: the company has a strong endogenous growth momentum and accelerated product expansion. It is estimated that the company's 17-19 net profit is 390 million yuan, 469 million yuan and 591 million yuan respectively, EPS is 0.88,1.06 yuan and 1.33 yuan respectively, PE is 35 times, 29 times and 23 times respectively, maintaining the "overweight" rating.
Risk hint: the expansion of broadband carrier products and fire protection products is not as expected.