Event description: on October 8, 2018, the company announced that the former controller (chairman) and other shareholders of the company transferred their total shares of 15% of the company to Fujian Electronic Information (Group) Co., Ltd at a price of not less than 6.86 yuan per share.
The investment of state-owned assets brings industrial resources, reducing the risk or enhancing the market confidence.
Fujian Electronic Information (Group) Co., Ltd. is 100% controlled by the State-owned assets Supervision and Administration Commission of the Fujian Provincial people's Government. The listed companies invested also include many high-quality enterprises in the electronics industry, such as Star net Ruijie, Furi Electronics, Ashi Optoelectronics and so on. Fujian Province has given greater support to the electronics industry. At the beginning of the year, Fujian Province put forward the "opinions on accelerating the innovative Development of the Provincial Industrial Digital economy" and set the goal that the scale of the electronic information industry will exceed 1.2 trillion yuan in 2020. The company introduced the Fujian State-owned assets Supervision and Administration Commission as the actual controller. It is expected to obtain favorable policy support to promote the rapid development of the main business.
From the transaction level, the transaction price is not less than 6.86 yuan per share, compared with the market price of 5.61 yuan per share before the suspension, there is a 22.3% premium, and share price repair is supported; this time, major shareholders transfer part of their shares to obtain the return of funds, which can effectively reduce the company's financial risk, and the high risk caused by the pledge rate of major shareholders worried by the market is also expected to be alleviated.
Fundamental logic is still valid, steady performance will eventually be released.
In traditional business, relying on its reserve of technology and management capabilities that have been ploughing deeply in the middle and low end for many years, on the one hand, XIAOMI, a high-quality domestic mobile phone manufacturer who accelerated penetration overseas when the domestic mobile phone market was in the doldrums, was bound to ensure its own shipping level; on the other hand, the company continued to infiltrate into the middle and high-end models of well-known domestic brands to optimize product structure and compete for future value-added space.
Emerging business, 5G era will bring good opportunities for the growth of the company. First of all, FPC products company has gradually acquired the production technology of LCP flexible antenna, which is ready for the explosion of 5G mobile phones; in terms of wireless charging products, the company has mastered the upstream amorphous strip, which has a clear advantage in the domestic competition; it is technologically leading in EMI wave absorption and EMI shielding materials, and the demand will accelerate after the outbreak of 5G.
It is conservatively estimated that the 18-year valuation is only 13 times, focusing on the opportunity for valuation repair.
We conservatively estimate that the company's 2018-2020 return net profit is 1.5 billion, 1.87 billion and 2.04 billion, corresponding to the PE is only 11.7x, 9.4x and 8.6x, the valuation is low, it is recommended to pay attention to the valuation repair opportunities.
Risk hint: the smartphone market remains in the doldrums; there are adverse factors in the macro environment.