Key points of investment
Annual revenue and profit doubled, which is basically in line with expectations: the company achieved revenue of 1,265 million yuan in 2017, an increase of 110.78% over the previous year; the comprehensive gross margin was 37.46%, a slight decrease of 0.78 pct over the previous year. The main PCB business with relatively low gross margin increased its revenue share; the company achieved net profit of 198 million yuan, an increase of 171.27% over the previous year; among them, the PCB precision processing auxiliary materials business achieved revenue of 216 million yuan, a year-on-year increase of 0.08%, a year-on-year decrease of 0.49pct to 29.79%; PCB Precision The processing and testing equipment business achieved revenue of 196 million yuan, a year-on-year increase of 144.63%, and gross margin increased 1.26pct to 29.46%; the LCD module business achieved revenue of 320 million yuan, an increase of 95.82% over the previous year, and gross margin decreased 4.41 pct to 40.15%; the LED automated assembly and testing equipment business achieved revenue of 210 million yuan, a gross profit margin of 34.43%; the lithium battery equipment and accessories business achieved revenue of 192 million yuan, an increase of 60.37% over the same period last year, and the gross margin increased 0.59pct to 45.1%. The automated welding line and parts business achieved revenue of 97 million yuan, with a gross profit margin of 51.8%.
Endogenous development vitality has been stimulated. Leading lithium battery testing segment leaders: Benefiting from the global PCB industry boom and strong demand from downstream customers, the company's original PCB business achieved operating revenue of 413 million yuan, an increase of 39.15% over the previous year, and the market share further increased. Among them, the PCB precision processing and testing equipment business achieved revenue of 196 million yuan, an increase of 144.63% over the previous year. Benefiting from strong demand from the downstream lithium battery industry, the company's lithium battery business (mainly lithium battery X-ray inspection equipment) achieved revenue of 192 million yuan, an increase of 60.37% over the previous year, and continued to maintain stable cooperative relationships with benchmark customers in the new energy industry such as ATL and CATL.
There are gains and losses in epitaxial mergers and acquisitions, and the intelligent manufacturing layout is perfect: in 2017, the company completed strategic restructuring with Xuanshuo Intelligent Manufacturing and Peng Yuwei; reached strategic cooperation with Zhengye Jiukun and Huadongxing. On the basis of the original PCB business, the industrial chain was further extended, entering fields such as automated welding, elevators, LED, lithium batteries, industrial Internet, etc., and perfected the company's industrial layout in the field of intelligent manufacturing. In 2017, the subsidiary Jibin Technology achieved operating revenue of 320 million yuan, an increase of 57.19% over the previous year, achieved net profit of 6,1046,900 yuan, an increase of 13.14% over the previous year, exceeded the annual performance target, and expanded into the OLED field through technological upgrades based on the original business and technology.
The subsidiary Peng Yuwei achieved revenue of 102 million yuan, which is basically the same as 2016, and achieved net profit of 368.263 million yuan, an increase of 6.99% over the previous year, exceeding the promised performance in 2017, and further increased gross margin. The subsidiary Xuanshuo Intelligent Manufacturing achieved revenue of 231 million yuan and net profit of 32.8794 million yuan, falling short of performance promises. Xuanshuo Intelligent Manufacturing adjusted its development strategy, entered the new energy industry, and successfully developed high-end equipment and automated production lines for the new energy sector, such as intelligent lithium battery PACK production lines and laser pole ear cutting and molding machines. Currently, interested customers such as BYD, CATL, Guoxuan Hi-Tech, AVIC Lithium Battery, Tianjin Lishen, and Yinlong are in the business negotiation stage.
Strengthen scientific research and development, new products or market recognition: In 2017, the company invested 653.2327 million yuan in R&D, accounting for 5.16% of the company's revenue, an increase of 77.70% over the same period last year. The company established the Central Research Institute, which includes application platforms for laser technology, X-ray technology, materials technology, automation technology, software technology, etc., to simultaneously promote applied technology research and basic technology research and new product development. In 2017, the company developed a number of new products, such as picosecond laser cutting machines used in the PCB and 3C fields, automatic line width testers used in the PCB, semiconductor and LCD fields, laser pole ear cutting and molding machines for lithium batteries, and intelligent lithium battery pack production lines. Some of the new products have already been introduced to the market, and new customers can be expected to explore new fields this year.
Investment advice: As production capacity in the PCB, semiconductor, LCD panel and other industries continues to shift to China, and lithium batteries benefit from the continuous increase in demand for promotion of new energy vehicles, demand for relevant testing equipment and automated production lines from various manufacturers is bound to be strong. The company has a good reputation in terms of product quality, technology research and development, service, etc. in the above fields, and the company will benefit in the long term. We forecast that the company's revenue in 2018-2020 will be 1,724 million yuan, 2,195 million yuan and 2,684 million yuan respectively; net profit will be 253 million yuan, 323 million yuan and 421 million yuan respectively; EPS will be 1.28 yuan, 1.64 yuan and 2.14 yuan respectively; according to current stock prices, the company's price-earnings ratio in 2018 will be 22 times, maintaining “buy-A”
ratings.
Risk warning: macroeconomic recovery falls short of expectations, downstream demand growth slows down; risk of accounts receivable carry-over into bad debt; risk of commercial impairment when the performance of acquisition companies does not meet promises; risk of shortage of capital due to large-scale investment and construction projects; risk of falling gross margin, etc.