Profits fell slightly. The company expects revenue of 1.03 billion yuan in 2018, down 8.91% from the same period last year; net profit of 182 million yuan, down 13.77% from the same period last year; and gross profit margin of 28.83%, down 7.56% from the same period last year. The decline in net profit and gross profit margin is due to the decline in the market price of LED chips.
Domestic LED industry is in the stage of rapid development. Due to the continuous decline in chip prices, part of the production capacity of international manufacturers has been shut down, and the LED industry chain has accelerated its transfer to China. Domestic chip giant companies actively expand production, LED equipment manufacturing, chip manufacturing, chip packaging and downstream applications have made great progress. China has become the largest market in the field of LED, which has greatly strengthened the global discourse power of domestic LED chips. The domestic LED industry is expected to form a trillion-class market scale in 2020.
Domestic LED chip leading enterprises. The company is mainly engaged in R & D, production and sales of semiconductor optoelectronic products, the main products are LED and GaAs solar cells epitaxial wafers and chips. The company is one of the largest enterprises in the field of red and yellow LED epitaxial wafers and chips in China, and it is also an important supplier of blue and green LED wafers and chips. The company will continue to consolidate its leading edge in the red and yellow light field, and actively expand production to the blue-green light direction, and strive to become an oligarch in the blue-green light field.
Invest in high-end semiconductor R & D and production projects. The company invested 1.597 billion to build VCSEL, high-end LED chips and other high-end semiconductor R & D and production projects. VCSEL is based on gallium arsenide semiconductor materials, which is different from LED and LD. It is widely used in optical communication, optical interconnection, optical storage and other fields. With years of accumulation in the field of gallium arsenide and gallium nitride optoelectronic devices, the construction of VCSEL will help the company to make a breakthrough in the laser market, thus promoting the company's strategic development. All the high-end LED chip projects will adopt 4-inch or 6-inch processing, which will increase production and dilute fixed costs at the same time, reduce unit chip costs, thus bringing cost advantages and greatly improving the company's market competitiveness.
Continue to promote the acquisition of Zhejiang Bolant. In November 2018, the company announced that it planned to buy 100% equity of Zhejiang Boland for 650 million yuan, but it was not approved by the second interim general meeting of shareholders in 2018. The company said that it will further communicate and demonstrate and promote the acquisition work.
Profit forecast: the company's revenue growth from 2018 to 2020 is expected to be-8.91%,-3% and 2%. The company's EPS is 0.25,0.21 and 0.21 yuan, respectively.
Risk tips: 1) the price of LED chip drops; 2) the progress of the construction project is not as expected; 3) there is a risk of suspension in the acquisition of Zhejiang Boland.