The company increased R & D investment, order-driven 19-year growth, and maintained the "buy" rating. On January 30, Jin Cigna released its 2018 annual performance forecast. The company expects 2018 net profit to be 1.30-150 million yuan, 0-15% year-on-year growth of 0.19-39 million yuan, an increase of 138-388% over the same period last year and-5-95% month-on-month growth. The main influencing factors of performance changes are:
In 2018, the company's R & D expenses increased by about 30 million yuan compared with the same period last year, and Jinnuo factoring company calculated that the asset impairment loss affected the net profit of returning mother about 1200-15 million yuan. Excluding the increase in R & D costs and the impact of asset impairment of factoring, the company's 18-year performance growth rate of 32-50% year-on-year, the overall performance is basically in line with expectations. The continued success of major customer orders has effectively driven 19 years of performance growth, and we expect EPS for 18-20 years to be 0.25max 0.44max 0.60 yuan, maintaining a "buy" rating.
5G times single fan antenna product value volume and proportion increase, the future is expected to benefit from 5G construction in 5G, the company layout involves PCB, connectors, chips, etc., according to our report released on January 24, "5G RF changes, Nuggets upstream new opportunities", the company's 5G single fan antenna product value (RF PCB+ connector) can reach about 1800-2000 yuan, compared with 3G 4G product structure The value and proportion of single antenna have been increased. Recent announcements of Nokia pilot projects show that in the 5G era, the company's advantages may not be limited to RF PCB and connectors. We believe that the company, as the target of 5G RF quality, has a good product line layout on the side of 5G wireless base station. With the commissioning of Xinfeng PCB project, the company is expected to benefit greatly from 5G construction in the future.
The continued landing of major customer orders verifies the prosperity of the industry and the competitiveness of the company's products. We believe that global operators will continue to invest in 4G investment in 2019, and domestic FDD re-cultivation and traffic growth will drive 4G investment. Recently, the company has continuously obtained orders from major customers Ericsson in China (the volume share is about 62.36%) and overseas (the winning bid amount is about US $60 million). Both in terms of amount and share, the company has verified the prosperity of the industry and the competitiveness of the company in the field of base station supporting products. We believe that in the context of the continuation of the global 4G boom, the company's product line is expected to maintain steady growth.
The company attaches importance to R & D investment, and it is expected that new products and new markets will be landed.
We estimate that the company's R & D expenditure will be about 115 million yuan in 2018, an increase of about 30 million yuan over the same period last year. The company's R & D expenditure rate in 16-18 is about 3.5%, 3.7% and 4.2%. We can find that the company continues to increase R & D investment by integrating and upgrading the company's R & D team and research institute resources (Optical Communications Institute, 5G Communications Institute, Cable and Connector Institute, electromagnetic and signal Systems Institute). Accelerate the promotion and continuous investment of new projects and new markets. According to the company announcement, the company has undertaken the 5G high and low frequency integrated test antenna (28GHz RFmodule and 3.5GHzRFmodule) project of Shanghai Nokia Bell Laboratories, has completed the assembly and preliminary testing, made a breakthrough in research and development, and is expected to land new products and markets in the future.
5G RF quality target, which is expected to benefit from 5G in the future, maintain the "buy" rating. Taking into account the impairment loss on assets of Jinnuo factoring in 2018 and the impact of the company's increased investment in research and development on profits, we adjust the company's EPS for the year 2018 to 0.25shock 0.44x0.60 (before the adjustment is 0.31), and we continue to maintain the company's performance forecast for 2019-2020. The target price (14.08-15.40 yuan) remains unchanged, maintaining the "buy" rating.
Risk tips: project signing performance is not as expected; 5G construction is not as expected; military business is not as expected.