Events:
On April 20, 2017, the company released its first quarterly report of 2018. In the first quarter of 2018, the company achieved operating income of 295 million yuan, an increase of 210.96% over the same period last year, and a net profit of 88 million yuan, an increase of 402.70% over the same period last year.
Main points of investment:
Diamond cutting line volume, Q1 performance increased significantly in 2018
In 2017, the company's fund-raising project (annual output of 2 million km diamond cutting line project) has all reached production. Due to the increase in sales revenue of diamond cutting line products, the company achieved an operating income of 295 million yuan in the first quarter of 2018, an increase of 210.96% over the same period last year, and a net profit of 88 million yuan, an increase of 402.70% over the same period last year.
The growth rate and share of products with high gross profit margin have increased.
The company's main products include ultra-fine electronic wires and diamond cutting lines. Ultra-fine electronic wires include conductors, film wires, and wireless induction coils formed by further processing of film wires, which are widely used in consumer electronics, new energy vehicles, intelligent robots, medical devices and other fields. Diamond cutting line is mainly used in the field of hard and brittle material cutting in solar photovoltaic and sapphire industry. Among these products, diamond cutting line has the highest gross profit margin, 56.21% for the whole of 2017, accounting for 49.19% of the total income, up from 25.9% in 2016, making it the highest product. With the expansion of the diamond cutting line project in 2018, the company's product structure will be further improved and the overall gross profit margin will also be increased.
Long-term optimistic about wireless induction coil and battery polar ear business
The company's wireless induction coil products are R & D and production for Apple Inc and other companies' smartwatch wireless chargers, and are the main suppliers of this kind of products. In 2017, the revenue of this product increased by 238.78% year on year. As wireless charging is in the penetration period, we are optimistic about the future market space of this product. In 2017, the company added battery ear products, which are mainly used in power lithium-ion polymer batteries for pure electric vehicles and hybrid vehicles. With the rise of the new energy vehicle industry, the market demand for battery ear products will expand. At present, the main customers are Weihong Power, Wanxiang A123, Tianjin Jiewei and so on. Therefore, we are optimistic about the future growth prospects of the company's products.
Profit forecast and investment suggestion
The company's EPS in 2018 and 2019 is expected to be 3.87 yuan and 5.74 yuan respectively, and the PE corresponding to the closing price of 116.78 yuan on April 19, 2018 is 30.21 times and 20.36 times respectively, maintaining the "overweight" rating.
Risk factors.
The risk of a decline in gross profit margin of diamond cutting lines; the risk that the promotion of new products is not as expected.