Event: on June 27, 2019, the company issued a notice on the change of company name and securities acronym. The company has recently completed the registration procedures for industrial and commercial change and obtained a business license issued by Nanyang City Market Supervision and Management Bureau. Officially changed its name to "China Optics".
Comments: continue to firmly recommend the company, the major asset reorganization of the company and Henan Zhongoptics Group Co., Ltd. has been completed, after the completion of the reorganization, the company has entered the field of optoelectronic equipment downstream of the industry and the field of optoelectronic military products. The main business has been transformed into the business layout of "optoelectronic components + photovoltaic equipment" and "optoelectronic military products + optoelectronic civilian products". Last year, the company cut into the consumer electronics field, and entered Huawei's high-end P30 supply chain, and gradually deepened cooperation with Huawei, which is expected to gradually grow in the consumer electronics field. In terms of military products, the impact of military reform was basically eliminated in 2017 and gradually expanded at the end of 2018, and the company's military business benefited from rapid growth.
The US supply chain is gradually recovering and Huawei has bottomed out. On June 25, Micron, a US memory chip maker, said that it had resumed shipments of some chips to Huawei, mainly because products made by US companies overseas were not restricted by export control regulations. In addition, other manufacturers, such as Intel Corp, are also gradually resuming supply to Huawei. As US companies are gradually resuming supply to Huawei, the decline in Huawei's mobile phone shipments is expected to be alleviated and is expected to benefit the Huawei industry chain. In addition, the company is a major supplier of P30 periscope cameras, and has cooperation with Huawei in precision films, functional films, optical waveguide devices and other fields, all of which show that the cooperation between the company and Huawei is gradually deepening. the company's business in the consumer electronics market is expected to continue to grow.
The bidding for military procurement continued to expand significantly at the end of 2018, and the infrared track returned to a high growth rate. According to the information we have sorted out in the "military matching" section of the military equipment Purchasing Network, as of December 6, 2018, a total of 1413 matching orders have been released by the equipment acquisition net, and these orders have been released in large quantities since Q4: a total of 598 military supporting tenders were released in October, 461 in November and 246 in the first 6 days of December. We believe that the impact of military reform in 2017 has been basically eliminated, and the high economic cycle officially arrived in the second half of 2018 and continued in 2019. The infrared industry chain can be divided into upstream chip manufacturers and downstream machine manufacturers. The chip manufacturers are Gaode Infrared, Dali Technology and Ruichuang Micro Nano respectively, and the downstream machine manufacturers are China Optics, Jiangji Minke and Eleven Institute. According to Wind data, the revenue growth rates of Dali Technology, Jiuzhiyang, Gaode Infrared, Ruichuang Weinar and Lida Optoelectronic Infrared are 45.52%, 61.48%, 5.44%, 146.66% and 147.71%, respectively. The company has developed a number of low-light and infrared sight lenses that are in the leading level in terms of recognition distance and firing accuracy, and their comprehensive performance is in the leading position in China. Our army is gradually improving the configuration of the military sight, which will be beneficial to the development of the company's infrared sight.
Investment advice: give the company a profit forecast of 274 million yuan for the year 19-21, maintaining a "buy" rating.
Risk tips: the intensification of Sino-US trade war, infrared gun penetration rate is not as expected, research and development progress is not as expected, and the integration effect is not as expected.