I. Overview of events
On February 28, the company released its 2018 results, KuaiBao, with an annual operating income of 2.6 billion yuan, an increase of 13.7% over the same period last year, and a net profit of 136 million yuan, an increase of 4.5% over the same period last year.
II. Analysis and judgment
Performance growth is in line with expectations and gross profit margin is stable
In 2018, the company achieved a net profit of 1.36, an increase of 4.5% over the same period last year, and the growth rate was within the forecast range of the annual report. During the reporting period, the company adjusted the group management structure, promoted fine management and improved management efficiency; the products were continuously optimized, the market competitiveness was strengthened, and the gross profit margin tended to be stable. At the same time, investment in R & D was increased, and R & D expenditure increased by 35% compared with the same period last year. In addition, Jinnuo (Tianjin) factoring Co., Ltd., a subsidiary, made an impairment loss of about 3000-33 million yuan due to litigation. However, the company actively develops new markets and speeds up the sales of new products, and its performance still maintains steady growth compared with the same period last year.
5G commercial acceleration, cable and PCB services are expected to scale up
The company's traditional business is the R & D and production of high-end RF cables, and the communications sector accounts for about 80% of the revenue. Products include, but are not limited to, high-speed transmission inside and outside the cabinet, optical transmission, radio frequency transmission, power transmission, 5G antenna core components, data center integrated cabling and other products. At the present stage, the company focuses on the R & D and manufacture of 5G products, including PCB/PCBA for 5G antenna, optoelectronic composite cable and board-to-board connector.
On December 7, 2018, the company announced that Ericsson won the tender for VPA GLOBAL global negotiations (overseas) in 2019, and the winning product was (4G/5G) base station materials, with a winning amount of more than US $6000. On January 22, 2019, the company announced that Ericsson won the tender for the 2019 VPA GLOBAL global negotiation (China). The winning product was the base station supporting products, and the number of product codes accounted for about 62.36% of the total tender codes of Ericsson's base station supporting product categories in China. Benefiting from the accelerated commercialization of 5G, revenue growth in the corporate communications sector is expected to remain above 25% in the future.
The installation of new aircraft is accelerated, and military business is expected to grow rapidly.
The company's military business is mainly an integrated harness scheme for airborne / offshore platforms that meets the requirements of EMC, accounting for about 20% of revenue, and its products include integrated wiring harness, aviation wires, connectors and components. In addition, the company has carried out the research and development of the system-level scheme "underwater integrated system" and its subsystem "underwater and air integrated information system" in the field of special science and industry. products include passive directional sonobuoy, underwater autonomous mobile detection sonar, underwater fixed sonar. In the next two years, benefiting from the increasing defense spending and eliminating the impact of military reform to eliminate the industry law of "loose before and tight after" during the 13th five-year Plan, the company's military business is expected to see rapid growth, and future income growth is expected to maintain more than 20%.
III. Investment suggestions
The company layout 5G + military industry, the downstream industry is more prosperous, we are optimistic about the long-term development of the company. From 2018 to 2020, the company's EPS is expected to be 0.24,0.35 and 0.43 respectively, corresponding to PE of 60X, 40X and 32X, with an average historical valuation of 76X. Considering the company's large growth space in the communications and military industries, it is given a "recommended" rating.
Fourth, risk tips:
The 5G propulsion fell short of expectations, and the military aircraft were not installed as expected.