Event: United Optoelectronics issued a forecast for the first quarter of 2019, saying that the company's net profit belonging to shareholders of listed companies was 1191.39-13.3156 million yuan, up 70% from 7.0082 million yuan in the same period last year.
Comments: United Optoelectronics, as our long-term favorite optical track quality contestant, the decline in net profit in 2018 due to equity incentive fees and other factors has been digested by the market, with the catalysis of optical lens under the blessing of ultra-high-definition video, the foundation of the fund-raising project continues to consolidate, 2019 performance is expected to usher in a new growth point, continuous recommendation.
The steady increase in revenue has stepped into the upward track, the equity incentive fees have been digested, and the operating efficiency has improved significantly. From 2016 to 2018, it increased by 20.18%, 27.39% and 24.64% year-on-year, which is in an upward cycle. The amortized equity incentive cost in 2019Q1 is 3.1884 million yuan, down 53.55% from 6.8647 million yuan in the same period last year. The equity incentive fee affecting last year's net profit has been absorbed, and the company will be "light" in 2019. According to the 2019Q1 performance forecast, the company will strengthen cost control, slightly improve the comprehensive gross profit margin, and significantly improve operating efficiency, achieving a turnround compared with 2018 net profit.
With the rapid growth in the field of vision, optical lenses have ushered in a rising tide. Joint Optoelectronics focuses on the R & D and production of optical / optoelectronic products, which are used in mobile camera modules, digital cameras, cameras, vehicle camera systems, security surveillance and other fields, with a market share of more than 70% in high-end security surveillance lenses. There is no doubt that the optical track, security as the first artificial intelligence landing scene application, the lens, especially the high-end lens has become the core equipment of the front-end data acquisition. The rapid growth of the large industry itself, superimposed high-end lens penetration and enhanced resonance will accelerate the company's follow-up growth.
Technology has created a moat, and new products continue to calibrate Asian Optics. With aspheric glass lens technology as the core competitiveness, Taiwan Asia Optics has been recognized by the market. We believe that United Optoelectronics, which is in a continuous line with Asian Optics, is likely to follow the same path of development. United Optoelectronics has advanced aspheric zoom glass lens technology, occupies a place in the domestic security high-end lens field, and continues to extend the product line horizontally. At the same time, actively expand the emerging areas of business, in the car began to make a breakthrough. We believe that the industry space determines the upper limit of the company, and the R & D moat determines the lower limit of the company. United Optoelectronics is a typical enterprise with R & D genes, which continues to bring forth new ideas in the field of high-end lens manufacturing.
Actively promote fund-raising projects, is expected to usher in more room for growth. The company speeds up market expansion, while promoting product upgrading, it continues to increase R & D investment and technology and talent reserve for new technologies and new industry applications, which lays a good foundation for the company to raise investment projects and put into production as soon as possible. Before listing, the development of the company is restricted by the bottleneck of insufficient production capacity. With the launch of the fund-raising project, the further release of production capacity will bring more room for growth for the company.
Based on the impact of equity incentive fees last year, the Sino-US trade war suppressed downstream demand and the release of production capacity slightly lower than expected, and increased equity, we adjusted the company's EPS from 0.97,1.56 yuan per share to 0.74,1.06 yuan per share from 2019 to 2020, maintaining a "buy" rating.
Risk hint: the fund-raising project encountered obstacles, and the demand for optical products was lower than expected.
