Main points of investment:
Event: Tony Electronics reported revenue of 295 million yuan in the first quarter, up 211% from the same period last year. The net profit returned to the mother was 87.93 million yuan, an increase of 403% over the same period last year, while the non-net profit was 81.51 million yuan, an increase of 34.1% over the same period last year. ROE raised 4.63pct to 11.34%.
1Q2018 performance growth is mainly driven by diamond line. 1Q revenue grew 211% year-on-year, down 4.3% month-on-month, and net profit grew 34.1% year-on-year and 1.6% month-on-month. The company's main products at this stage are: 1) ultra-fine electronic wires (including conductors, laminated wires and wireless induction coils), it is widely used in consumer electronics, new energy vehicles, intelligent robots and medical devices. 2) Diamond cutting lines are mainly used in the cutting of hard and brittle materials in solar photovoltaic and sapphire industries. 1Q is the off-season of consumer electronics, the performance growth of ultra-fine electronic wires is limited compared with the previous month, while the diamond line is the main force of performance growth.
The main force of growth has switched from conductor to diamond cutting line, and the company's comprehensive gross profit margin and net profit margin have increased significantly. In 2016, conductor business accounted for 63% of revenue. In 2017, the proportion of volume revenue of diamond wire business rose to 49%, and gross profit margin rose from 47% to 56%. Diamond lines drive both revenue and profit margins. Tony's comprehensive gross profit margin rose from 35.7% in 2016 to 41.5% in 2017, and net profit increased from 19.1% to 23.9%. With the further increase in shipments of diamond line products, 1Q's gross profit margin is 48%, which is 30% higher than that of 4Q2017 and 2pct.
New assets and management software are introduced to drive a new round of King Kong Line business growth. At the end of 2017, the total assets were 1.24 billion, an increase of 162% over the same period last year. At the end of the first quarter, the company was under construction of 10.71 million yuan, an increase of 68.7 percent over the end of 2017. At the same time, the company introduced production management software worth about 3 million yuan. The net assets belonging to shareholders of listed companies were 730 million, an increase of 189 per cent over the same period last year.
At the end of 2017, the company's fixed assets turnover rate was 2.7, which was significantly lower than that of 3.3 in 2016, mainly due to the production time of the new plant at 4Q. Compared with the 2016-2017 business cycle and working capital turnover, the company's operating capacity has been improved to a certain extent. At present, the first phase of the new plant has been put into operation, and the second phase of the plant is expected to be completed by the end of the 18th, and 140 mu of new factory land will be awarded at the beginning of 2018. Based on the company's current operating capacity, the new assets in 2017 laid the foundation for revenue and profit growth next year and the year after next. The company revamped its own equipment to expand production, the current annual production capacity of about 8 million KM,18 annuity rigid line is expected to lead to a substantial increase in the company's performance.
Maintain earnings forecasts and maintain "buy" ratings. With the wire drawing process as the starting point, the company gradually expands the variety of product lines and expands the process reserve. In addition to expanding the production capacity of diamond wire, Tony will also benefit from the demand for wireless charging winding coils for mobile phones. Based on the international leading consumer electronics wire technology, the company expands to new energy car lines, medical lines, battery ears and other high value-added products, which is expected to break the monopoly position of international manufacturers in these fields. Maintain the company's revenue forecast for 2018, 20119, and 2020, with a revenue forecast of 1.31 billion, and a net profit of 3.8 million, with a net profit of 5.3 million. It is optimistic that the company's performance will be able to cash in on a phased basis and maintain its buy rating.