In the fluctuation of the prosperity of the industry, the operation of the company remains stable, and the gross profit margin is on the rise compared with the same period last year. The company's annual revenue in 2018 was 2.235 billion yuan, an increase of 28.71% over the same period last year, and its net profit was 239 million yuan, an increase of 37.96% over the same period last year. Judging from the data of the past two quarters, 18Q4 and 19Q1 revenue increased slightly compared with the same period last year, while the month-on-month decline was mainly due to increased competition caused by the weakness of the industry. In terms of profit margin, the gross profit margin for 18 years as a whole was 23.94%, showing an upward trend in each quarter, which we believe is mainly due to the continuous optimization of customer and product structure. 19Q1 also performed well in the off-season.
The layout of many categories is perfect, and the product quality is well received by customers. The company's product application fields cover automotive electronics, network communications, computing storage, industrial instruments, consumer electronics, etc., with superior product quality and rapid delivery, with a pass rate of more than 96% and a delivery rate of more than 95%. Customer satisfaction reached 98%, all in the forefront of the industry. The company is recognized by many downstream manufacturers, "excellent supplier" of Epson Group, "Strategic Cooperation Award" of Skyworth Group, and is the only "PCB strategic supplier" of Samsung Group in China. The company made a breakthrough in overseas customer development, with overseas sales revenue of 1.308 billion yuan in 2018, an increase of 44.22% over the same period last year.
The PCB industry is expected to pick up and be optimistic about the layout of communications and automotive electronics. The global PCB industry is showing a pick-up trend, and the communications sector has the highest market share in the world-- 5G is initially used for commercial use in 2019, and the overall scale growth for the whole year is expected. The growth rate of communication automotive electronics in the mainland is higher than that in the world, and the company's automotive electronics products are more mature.
Research and development and production expansion dual grasp, medium-and long-term hard power is strong. The company invested 87.3218 million yuan in R & D in 2018, an increase of 31.6% over the same period last year. The fund-raising project is carried out smoothly. The "High Precision PCB Project with an annual output of 1.2 million square meters" and the "Automotive Electronics PCB Project with an annual output of 800000 square meters" are expected to be completed by the end of 2019. After reaching production, the sales revenue will reach 2.3 billion yuan.
Investment suggestion: the warming trend of PCB industry is expected, and the market prospect of PCB in the field of automotive electronics and communications is good. The company has steadily expanded its production capacity, and the two major fund-raising projects of "High Precision PCB" and "Automotive Electronics PCB" are progressing smoothly and are expected to reflect strong growth ability in the rising period of the industry. We expect the company to achieve a net profit of 296 million yuan in 2020, which is currently given a "buy" rating for the first time corresponding to PE 23x/16x.
Risk hint: the prosperity of the PCB industry is low, and the capacity climbing is not as expected.