The company released its 2018 annual report: in 2018, the operating income was 706 million yuan, up 1.53% from the same period last year, and the net profit was 5.1431 million yuan, down 52.20% from the same period last year. The non-net profit was-7.422 million yuan, down 206.41% from the same period last year, and the basic earnings per share was 0.0103 yuan. In terms of cash flow, the cash received from selling goods and providing services in 2018 was 812 million yuan, down 57.8 percent from the same period last year, while the net cash flow from business activities was 161 million yuan, an increase of 137.23 percent over the same period last year.
From a quarterly point of view, the company's Q1/Q2/Q3/Q4 realized operating income of 1.61 million yuan in a single quarter, an increase of 16.45% 18.68%, 13.89%, 7.00% and-951.43, 20.17, and 10.48 million yuan respectively, a year-on-year increase of 17.66%, 103.98%, 24.54%, 52.59%.
Comments:
The competition in the industry is fierce, and the profits of the company's main business are declining. Mainly due to increased competition in the industry, the increase in raw material costs and other reasons led to the decline in profits of the main business. In 2018, the revenue of ticket products was 516 million yuan, down 0.79% from the same period last year, and the gross profit margin was 23.11%, down 0.03 pct from the same period last year. The revenue from packaging office paper was 104 million yuan, down 0.43% from the same period last year, and the gross profit margin was 12.55%, down 7.26pct from the same period last year. In 2018, the company's gross profit margin was 21.52%, year-on-year decline in 2.54pct, net profit rate 1.98%, year-on-year increase in 0.11pct, expense rate, through measures such as optimizing management, reducing cost and increasing efficiency, the expense rate was well controlled. During the period, the expense rate was 20.25%, a year-on-year decline of 2.16pct, and the sales / management / financial expense rate was 7.27%, 13.83% and 0.85%, respectively. Year-on-year change-1/0.28/-1.44pct.
Create the layout of the whole industry chain of lottery and vigorously develop new business of lottery at the same time. The company actively arranges lottery R & D and electronic lottery business operation, through the construction of electronic lottery, lottery R & D and lottery platform, cuts into the field of upstream lottery R & D and downstream sales, and strives to break through the entire lottery industry chain, with R & D investment of 24.2266 million yuan in 2018, an increase of 0.13% over the same period last year. At the same time, the company has made great efforts to develop new business, the newly developed "Happy very" video lottery game has been launched in Chongqing welfare lottery, and has invested money in the research and development of sports lottery Android terminals, and the product has officially passed the test.
Acquire Huawei 5G core suppliers and enter the upper reaches of the 5G industry chain. The company plans to buy 30% equity of Flemish Technology with 345 million yuan in cash, and the underlying company promises to deduct non-net profits of 9000 yuan, 12000 yuan and 150 million yuan in 2019, 2020 and 2021 respectively, and the company has paid a transaction deposit of 69 million yuan on September 14, 2018. Flanders' main products are base station antennas and radio frequency devices. At present, there are three domestic production bases, and customers mainly include Huawei, Jingxin Communications, BYD, Foxconn and other well-known manufacturers. Fleming Technology is the strategic core supplier of Huawei, and the listed company in the same industry as Dongshan Precision is located in the first echelon of domestic base station antenna production. The completion of the acquisition of Flanders by Hongbo shares will improve the strategic layout of 5G in the 5G era, build new profit growth points of the company, and enhance the overall profitability of the company.
We estimate that the company's EPS will be 0.1,0.34 yuan in 2019-2020, and 88.28,25.58 times PE in 2019-2020, respectively, maintaining a "buy" rating.
Risk hint: the development of the main lottery business is not as expected, and the new business is not as expected.
