Summary of the report:
According to the 2018 interim report, the company achieved operating income of 1.403 billion, an increase of 38.39% over the same period last year, and a net profit of 102 million, an increase of 25.91% over the same period last year, mainly due to the construction-intensive projects of Changxin in Hefei and Jinhua in Fujian in the second half of 2017. the total revenue of the two projects is 719 million. In the first half of the year, the overall gross profit margin was 10.59% and the net profit rate was 7.25%, of which the gross profit margin in the second quarter was 12.32% and the net profit rate was 7.87%, which gradually returned to the previous level. In line with the previous judgment, the overall cost control of the company is better, with the implementation of large orders from large factories. It is expected that abnormal gross profit margin and net profit margin will gradually rise and return to rationality.
Domestic panel and semiconductor industry investment heat continues, has been widely recognized by the market, clean room project is the first to benefit. Taiwan semiconductors and panel production capacity has been transferred to the mainland, and Taiwan Ya Xiang has obvious advantages. According to the proportion of the business of the analysis company, the main business is almost entirely occupied by semiconductors and panel projects. Under the background of national will and industrial transfer, in the next few years, the annual average market space of clean room EPC in China's semiconductor and panel industry will reach 60 billion. With the company's current industry status and market share, there will be more room for improvement.
From the perspective of specific projects under construction and orders in hand, the 17-year annual report revealed that the unfinished 3.198 billion and July won bids for Fujian Jinhua 220 million and Wuhan Xinxin 281 million, which were basically completed in 18 years according to the general 6-9 month project cycle. However, the company terminated Foxconn orders, and except for some project implementation and acceptance delays and other reasons, the uncertainty of revenue recognition increased. The future growth is still based on the high prosperity invested by domestic wafer and panel factories, and with the company's current technology leadership and market share, the average annual order volume will increase greatly.
Investment suggestion: taking into account the termination of the Foxconn project and the delay in the progress of the project, it is prudent to lower the company's performance expectations and the corresponding target price, and the company's net profit from 2018 to 2020 is expected to be 188 million, 253 million, 331 million, corresponding to EPS 0.88,1.19,1.55 yuan, corresponding to PE is 24 times, 18 times and 14 times, maintaining the "buy" rating.
Risk hint: the implementation of some projects is delayed and terminated; the progress of acceptance is not as expected.