Continued profit in the second quarter, and the operation of the main business continued to improve.
The company forecasts that operating income in the first half of 2019 will increase by about 40% year-on-year, or about 126 million yuan. The net profit was 3800-43 million yuan, an increase of 301% Murray 327% over the same period last year, substantially turning losses into profits. Non-recurrent profit and loss is estimated to be about 63 million yuan, mainly including government subsidy, recovery of bad debts after current account recovery and income from disposal of fixed assets, etc., deducting non-net profit of-25 million yuan. Among them, the operating income in the second quarter was about 673.9269 million yuan, an increase of 14.3% over the previous quarter, and a profit of 1490.82-19.9082 million yuan.
Focus on the main industry, 5G dielectric waveguide filter mass production is imminent
At present, the company focuses on the main business of base station filter, and the main business operation is in line with expectations. The operating revenue and gross profit generated by the main business in the second quarter continued to improve compared with the first quarter, mainly due to the company's continuous optimization of product structure, steady growth in demand for 4G products and gradual climbing of shipments of 5G products (at present, 5G products are mainly in the form of metal cavities and metal cavities + dielectric resonant rods). The main reason why the final net profit was slightly lower than in the first quarter was that some receivables increased the proportion of bad debts and the provision for impairment of inventory due to the extension of the account period. The company's 5G dielectric waveguide filter in the "factory inspection" phase, is expected to obtain batch supply qualification in July at the earliest, which will bring increment to the performance in the second half of the year.
Debt restructuring of controlling shareholders has been agreed, which is conducive to the steady development of corporate governance.
Announcement the controlling shareholder Dafu Paitian Investment and China Cinda Asset Management Co., Ltd. Shenzhen branch debt restructuring project has been agreed by China Cinda Asset Management Co., Ltd., the specific plan has not yet been determined. This debt problem has a certain inhibitory effect on corporate valuation, if properly resolved is conducive to the stability of corporate governance structure.
Maintain the "buy" rating, taking into account the continuous improvement of the company's main filter industry.
The company has been the gold core supplier of Huawei for many years, the product strength and reputation are among the best, continuous R & D investment, 5G dielectric waveguide filter production is imminent, and the company's supply share in Ericsson and Nokia has also made continuous breakthroughs. Taking into account the continuous improvement in the main business operation of the company's base station filter in the second quarter and the mass production expectation of 5G dielectric waveguide filter, the company is expected to make a net profit of RMB 2.54 million in 2021, respectively. Taking into account the earmarked funds raised by the company, deducting nearly 2.5 billion of the cash market value, the company maintains a "buy" rating corresponding to the PE of 2019, 2020, and 33-23-17, 2021.
Risk hint
The demand of 5G is lower than expected; the qualification of mass production of dielectric waveguide filter is not as expected; the competition in the industry is intensified.
