Incidents:
1. The company issued the “Notice on Completing the Registration and Filing of Industrial and Commercial Changes”. The company name was changed from “Lida Optoelectronics Co., Ltd.” to “China Optics Group Co., Ltd.”. Recently, it has completed the commercial changes and filing procedures for the above matters, and obtained a “Business License”.
2. The company issued the “Notice on Changing the Company Name and Stock Abbreviations”. Following the company's application and approval by the Shenzhen Stock Exchange, as of June 28, 2019, the company's stock abbreviation was changed from “Lida Optoelectronics” to “China Optics”. The company's stock code has not changed, and it is still “002189”.
Comments:
1. The company name change was officially completed.
The major asset restructuring between the company and Henan China Optics Group Co., Ltd. was completed in 2018. The company entered the downstream industrial photoelectric machine field and the optoelectronic military goods field. The main business was transformed into the business layout of “optoelectronic components+optoelectronic equipment” and “optoelectronic military goods+optoelectronic civilian goods”. The name was changed to better utilize the brand effect of “China Optics” and promote the integrated and collaborative development of the business of listed companies between the military and civilians. Among the company's three main businesses (optical components, optoelectronic defense and site monitoring, and projector business), the optoelectronic defense and key site monitoring business (mainly military goods business) carried out by China Optics Group accounted for 37.57% and 57.20% of the revenue and gross profit of listed companies in 2018, respectively, and the projector business accounted for 23.13% of revenue. In 2018, the company's military goods business revenue increased by 143.11%, driving a sharp increase in performance. The company achieved annual revenue and net profit of the mother increased 55.34% and 237.74%, respectively, year-on-year. The company continued its high growth trend in 2019Q1, with revenue and net profit returning to the mother increased 23.38% and 198.99%, respectively. We believe that the changed company name will better reflect the company's current business distribution.
2. Set up a wholly-owned subsidiary, Nanyang Lida, to undertake the optical component business of the original parent company.
At the same time as the company changed its name, the company invested the operating assets and liabilities related to optical components of the original parent company, and set up a wholly-owned subsidiary, Nanyang Lida, which undertook the company's optical component related business. Currently, Nanyang Lida has been incorporated.
3. The military goods business is expected to continue to benefit from the construction of national defense informatization.
The company's military products include various light weapon scopes, stable control optoelectronic systems, and detection and interference systems. Some of the listed military products are exclusively supplied to the military, and there are also surveillance products for key border and coastal defense sites. The goal of strengthening China's military requires ensuring significant progress in information technology construction by 2020. As China's military spending continues to grow and military informatization construction continues to advance, it is expected that the company will continue to benefit from it. Moreover, at the beginning of the year, the company completed supporting financing projects totaling 351 million yuan (issue price: 15.35 yuan/share, adding 22.84 million shares). After deducting intermediary fees, a total of 336 million yuan was used for China Optics capacity building projects, which is expected to further enhance military strength.
4. The optical business has expanded to consumer electronics, with great potential for future development.
According to the MCW2019 conference held recently, Huawei officially announced that its global shipment volume of P30 series phones had reached 10 million units, and it took 62 days to reach this sales volume 62 days earlier than the previous generation product, the P20 series, showing strong sales momentum. Also, according to CCTV reports, Trump announced at the G20 summit that US companies can continue to supply Huawei. The company recently stated on Panorama's investor relations interactive platform that the company has provided core optical components such as periscope microprisms in batches for Huawei P30 series phones, and has established a good cooperative relationship with Huawei. The company's consumer electronics business is expected to have great potential for development.
5. Performance forecasting
The company's net profit from 2019 to 2021 is estimated to be 173 million yuan, 206 million yuan and 247 million yuan respectively, maintaining the “Highly Recommended - A” rating.
Risk warning: Product development progress falls short of expectations; competition in the civilian goods market intensifies
