Main points of investment
The company released its annual report for 2017: in 2017, the company achieved operating income of 1.265 billion yuan, an increase of 110.78% over the same period last year, and a net profit of 198 million yuan, an increase of 171.27% over the same period last year.
LCD module business led the company's high revenue growth, and the expense rate decreased significantly. In 2017, the company's LCD module business was the main driving force of the company's revenue growth, with revenue of 320 million yuan, an increase of 95.82% over the same period last year. The revenue of LED automatic assembly and testing equipment was 210 million yuan, which was one of the main sources of revenue increment. In 2017, the total proportion of the company's three fees was 19.76%, a significant decrease in 7.50pct compared with the same period last year, mainly because the company's R & D achievements gradually entered the harvest period, and the management expense rate decreased 7.29pct compared with the same period last year.
Deep layout intelligent manufacturing, broad space for development. In March 2017, the company completed the acquisition of Xuanshuo Zhizhao and Peng Yuwei, and entered the fields of LED, semiconductors, bulk patches, and welding automation; coupled with the previous acquisition of Toulian Electronics and Silver Technology, the company deeply laid out 3C automation. It is estimated that from 2016 to 2021:
China's PCB industry will maintain a compound annual growth rate of 3.4 per cent, higher than the global compound annual growth rate of 2.2 per cent and 2021.
The total output value of China's PCB industry will reach US $32.04 billion, accounting for 53.04% of the global total output value; the operating income of local FPC manufacturers of Chinese mainland is expected to achieve a compound annual growth rate of 7.6%; the market size of domestic lithium battery equipment will reach about 30 billion yuan; the size of the OLED market will reach US $75 billion, with a compound growth rate of 38%. The output value of the OLED packaging industry will also maintain a growth rate of 13%, with an output value of about 130 billion yuan. The market scale of laser processing equipment is expected to reach about 50 billion yuan.
Customer resources are of high quality, highlighting the competitiveness of products. The company has core customer resources in several industries, such as:
Lithium equipment field, with ATL, CATL, BYD and other industry benchmark customers; LCD panel line and including JDI, BOE, ZTE Corporation, Lance technology, Ofei technology and other large well-known manufacturers have long-term stable relations of cooperation; LED industry has Samsung, LG, Furi Lighting, Hongli Optoelectronics, Guozhan Electronics Group and other quality customers.
Profit forecast and rating: the company is a high-quality target in 3C automation field, with deep layout of industrial chain and high-quality customer resources. we adjust our profit forecast according to the latest annual report and estimate that the company's EPS from 2018 to 2020 will be 1.45 yuan / 1.84 yuan / 2.30 yuan, corresponding to the previous stock price PE is 19x/15x/12x, maintaining the "buy" rating.
Risk hints: the risk of bad debts of accounts receivable, the risk of impairment of goodwill, and the risk aggravated by competition.