Event: the company released its 2017 annual report, with an annual operating income of 1.1302879 billion yuan and an operating profit of 252.8489 million yuan, an increase of 1808.27% over the same period last year. The net profit belonging to shareholders of listed companies was 210.5603 million yuan, an increase of 335.2% over the same period last year. At the same time, the company plans to issue 1 billion convertible bonds to invest in Nanchang production expansion project.
Focus on the main business: high-speed growth of annual performance. The company's annual revenue was 1.13 billion yuan, down 1.68% from the same period last year, because the company spun off most of its non-chip and epitaxial wafer business this year, focusing on the main business of LED chips. The operating income of the company's chips and epitaxial wafers reached 1.095 billion yuan, an increase of 33.35% over the same period last year. In terms of gross profit margin, the gross profit margin of the company's major products increased significantly, including blue and green chips from 13.35% to 33.77%, red and yellow chips from 34.12% to 42.27%, and gallium arsenide solar cell chips from 39.62% to 41.38%. The business strategy of focusing on the main business has greatly enhanced the company's profitability.
Scale follows: full-color production expansion to ensure the advantage of scale. In 2017, the company has an annual production capacity of about 6.2 million pieces (equivalent to 2 inches), with a production capacity of 7.92 million under construction. During the year, the company successively announced red-yellow and blue-green production expansion plans, in which Yangzhou red-yellow light chip expansion-related equipment has been in place one after another, capacity release is imminent; Nanchang blue-green production expansion project has begun, and equipment has been installed in mid-2018 to reach production next year. Only chip enterprises with sufficient scale can ensure cost advantage and bargaining power of upstream and downstream industries, and full-color expansion ensures that the scale of the company is in the first echelon of the industry.
Technical features: red and yellow light faucet, is expected to benefit deeply in the new field. The company is the domestic red and yellow chip market share of the highest manufacturers, the existing red and yellow light production MOCVD a total of 26 cavities. For the infrared IR chip market, the company has inherent advantages, while the new display technology of MiniLED and MicroLED opens a new space for the company's red and yellow chip applications. The company's accumulation in red and yellow light chips ensures the company's competitiveness in new fields.
Profit forecast and investment rating. From 2018 to 2020, the company is expected to have revenue of 14.59 billion yuan, net profit of 2.67 million yuan, 3.61 billion yuan, and a net profit of 0.37 yuan, 0.50 PE, respectively, respectively, maintaining a "buy" rating in 22-16-13.
Risk hint. The company's production expansion falls short of expectations, and downstream demand falls short of expectations.
