Main points of investment
Company profile: established supplier of optical lenses for military and civilian use
The company, formerly known as the Optical instrument Factory of Fujian normal University established in 1958, changed in 2015. On July 1, 2019, the Securities Regulatory Commission agreed to register the initial public offering of shares in Science and Technology Innovation Board. The main business is military special optical lenses and optoelectronic systems, civil optical lenses, optical components and so on. It is an important military-civilian integration enterprise in Fujian Province and an important global optical lens manufacturer. As of pre-listing, Mr. he Wenbo was the actual controller with a shareholding ratio of 37.96%.
Optical lens industry: high technical barriers and continuous expansion of downstream applications
Optical lens products involve optical design, mechanical design, thermodynamic analysis, stray light suppression design, radiation analysis and other disciplines, is a typical technology-intensive industry, with high technical barriers. At present, the three main application areas of optical lenses are security, mobile phones and automobiles. Driven by the demand for upgrading, the security field is expected to grow steadily, with TSR predicting a compound growth rate of 6.6% from 2017 to 2021. In the field of domestic aerospace and military industry, a number of space projects in China are advancing rapidly, especially with the promotion of the remote sensing satellite construction plan, the demand for optical lenses is growing rapidly. With the increasing popularity of ADAS, the automotive industry will continue to grow. TSR expects a compound growth rate of 7.3% from 2017 to 2021. In addition, the demand for machine vision, VR/AR and other areas is gradually rising. Due to the high technical barriers and high market concentration, the number of suppliers with core technology is small and has a strong first-mover advantage.
The company has core technology and fully benefits from demand growth in security, military industry, and more emerging areas.
At present, the company's products are divided into two categories: customized and non-customized, which are used in military industry and security field respectively. With strong technical strength, the company has pioneered the design and manufacturing technology of large-caliber transmission astronomical observation lenses in the world, and has achieved the first in China in many fields, and a number of product series have achieved import substitution. 2017 has a market share of 11.8% in the global security lens field, ranking third. We believe that the growth point of the company's performance in the future, on the one hand, will come from the continuous growth of demand in the areas of security and military industry, and the vehicle business will continue to expand, on the other hand, the gradual landing of cutting-edge technologies such as artificial intelligence and the Internet of things are applying optical lenses to broader areas of the national economy, and will also become an important source of the company's performance.
Profit forecast and valuation
We predict that the company's income from 2019 to 2021 will be 627 million yuan, 717 million yuan and 819 million yuan, an increase of 14%, 14% and 14% over the same period last year, and the net profit of the company will be 111 million yuan, 139 million yuan and 170 million yuan, up 21%, 26% and 22% respectively.
We value the company's PE at 30-37 times, and the company's net profit in 2019 is expected to be 111 million yuan, corresponding to a market capitalization range of 33-4.1 billion yuan; we value the company's PS at 4.9-6.1 times, and the company's revenue in 2019 is expected to be 627 million yuan, corresponding to a market capitalization range of 31-3.8 billion yuan.
Risk hint: the business in the field of security is affected by the trade war, and the market competition in the field of security is becoming increasingly fierce.