In 2018, the company achieved revenue of 1.169 billion yuan, + 25.08% compared with the same period last year, and realized a net profit of 72.32 million yuan,-11.79% compared with the same period last year. The lower profit growth is mainly due to the increase in the expense rate caused by equity incentives, the decline in government subsidies and the increase in the effective tax rate caused by deferred income tax changes. The company's 2019Q1 achieved revenue of 232 million yuan, + 16.51% compared with the same period last year, and its net profit was 12.39 million yuan, + 76.81% compared with the same period last year. In the future, it is expected to continue to benefit from the continuous growth of lens high definition and maintain the "overweight" rating.
Revenue grew by 25% in 2018, profit growth was less than revenue, and 19Q1 improved. The company achieved revenue of 1.169 billion yuan in 2018, + 25.08% year-on-year; net profit of 72.318 million yuan,-11.79%; and non-return net profit of 53.69 million yuan, + 4.82%, of which the 18-year gross profit margin increased by 0.71pcts to 22.34%. The profit growth is lower than the income mainly due to: (1) the increase in the rate of R & D and management expenses. In 2018, the company's management expenses increased by 65.59% year-on-year to 65.14 million yuan, mainly due to equity incentive expenses of 26.47 million yuan in R & D investment of 96.15 million yuan, and the R & D expense rate from + 0.7pcts to 8.23%. (2) the government subsidy has declined, and the total government subsidy recorded by the company in the income statement in 2018 is 7.97 million yuan, which is only 22% of that in 2017. (3) the increase of effective tax rate caused by the change of deferred income tax. The company's 2019Q1 achieved revenue of 232 million yuan, + 16.51% compared with the same period last year. The slowdown is mainly due to the slowdown in the overall growth rate of downstream security; the net profit of 12.39 million yuan, + 76.81% compared with the same period last year, deducting the non-net profit margin + 0.2pcts to 4.8%, mainly due to the decline in expense rate.
Security lenses are growing steadily, while non-security laser products and off-screen fingerprints are growing. From a business point of view, the company's revenue from security / non-security lenses in 2018 is 10 / 140 million yuan, accounting for about 86% and 14% of revenue respectively. (1) Security business: revenue + 25.79%, lens sales + 105%, average ASP dropped to 72 yuan per unit, mainly due to product structure adjustment, middle and low-end ASP fixed focus lens accounted for an expansion of the proportion; the company's zoom lens global market share of 10.5% (high-end security zoom market share up to 77.8%), the leading position From the customer's point of view, the company's security lens TOP5 customers account for about 80%, and orders are concentrated in downstream customers such as Haikang Weiwei, Dahua shares, Yushi Technology and so on. Looking forward to 2019, we expect the security industry to still have double-digit growth, driving the company's lens business to maintain a growth rate of more than 20%. (2) non-security business: revenue is + 18.96% year-on-year, sales volume is-11.5% year-on-year, but ASP is increased to 41 yuan per Taiwan, while gross profit margin is + 2.89pcts to 17.59%, mainly due to the adjustment of product structure under the high-end strategy. The company has achieved stable delivery of ultra-short focus laser lenses in 2018, and the projection video product ASP is higher than security lenses. We are optimistic about the future development of laser TV, which is expected to drive the company's revenue expansion. In addition, according to the information disclosed in the announcement, the company has achieved large-scale mass production and delivery of fingerprint lenses under the mobile optical screen in 2019Q1, and the layout in vehicles, consumption and other fields continues, and the exploration of non-security products continues.
The fund-raising project continues smoothly, and it is expected that 2019Q2 will be completed and accepted and put into production. The company's fund-raising projects continued to move forward. by the end of 2019Q1, the progress of the project completion of the Engineering Technology Research and Development Center and the intelligent manufacturing base for high-end optoelectronic lens products was 36.13% and 22%, respectively, and was scheduled to be completed and gradually released in July 2019 and July 2020, respectively, to break through the capacity bottleneck and lay a solid foundation for revenue growth.
Risk factors: security industry is in the doldrums; downstream major customers are not as expected; non-security market development is not as expected.
Investment suggestion: due to the lower-than-expected recovery of the prosperity of the downstream security industry, we based on the annual report to adjust the company's 2019-2020 EPS forecast of 0.68max 0.9 yuan (originally 0.78max 0.96 yuan), give 2021 EPS forecast 1.06yuan, according to 2019 50 times PE, give the target price 34 yuan, maintain the "increase" rating.
