Company dynamic events
On January 15, the company issued a forecast for the first quarter, with an expected profit of 9800 yuan to 130 million yuan, an increase of-11.05% and 17.99% over the same period last year. Of this total, the integrated circuit sector is expected to achieve a net profit of 3800-45 million yuan, an increase of 52.67% over the same period last year, while the chemical sector is expected to achieve a net profit of 6000-85 million yuan, down 30% from a year earlier.
Comments on matters
The company realizes the double-wing layout of "electronics + chemical industry".
The company's traditional business is the production and sales of chemical products, the main products include caustic soda, propylene oxide, polyether and so on. In the second half of 2017, the company acquired two integrated circuit companies, Changsha Shaoguang and Weike Electronics, and entered the electronic business from GPU, FPGA, high frequency materials, RF modules and other fields. In 2020, the company participated in Wuhan Navigation Institute and further transformed from the field of Beidou navigation. Combined with the 2019 performance forecast, we expect the company's electronic business-related profit to be close to 180 million in 2019, surpassing the chemical sector.
Company GPU home-made resounding high-frequency high-speed materials to participate in 5G feast the company's current electronic field layout mainly includes "Changsha Shaoguang" and "Weike Electronics"
Two big assets. "Changsha Shaoguang", formerly known as the state-owned 4435 factory, was founded in 1960, relying on microelectronic products to make outstanding contributions to the development of national weapons and equipment. Changsha Shaoguang developed first-generation and second-generation graphics processing chips in 2014 and 2016 respectively. In December 2019, the company won 5980 million GPU orders for weapons and equipment and party and government organs. "Weike Electronics" business mainly includes high-frequency materials and devices, high-power power supply modules and thick film integrated circuits. Weike Electronics has made a domestic breakthrough in the field of high-frequency materials. Related materials and radio frequency devices are suitable for 5G communication equipment, and the domestic alternative market is broad in the future.
The accurate position of Beidou three Commercial immediate Company
The company announced on January 5 to pay 40 million yuan in cash to participate in 10.67% of the shares in Wuhan Navigation Institute. The research and development leaders of Wuhan Navigation Institute include academician Liu Jingnan, a leading figure in the field of Beidou navigation, and Han Shaowei, a candidate of the Thousand talents Plan. According to the National medium-and long-term Development Plan of Satellite Navigation Industry, the scale of China's satellite navigation industry will exceed 400 billion in 2020, of which Beidou 3 will complete the global networking this year, and the Beidou navigation industry chain will further grow rapidly. The Beidou 3 baseband RF integrated chip developed by Wuhan Navigation Institute has made great progress, and the batch streaming will bring explosive business development opportunities for Wuhan Navigation Institute. We believe that the company will start the Wuhan Navigation Institute to participate in the shares before the completion of the Beidou 3 network, and will not rule out further enhancing the control right and increasing the coordination between the Beidou 3 business and its own channel advantages.
Profit forecast and valuation
We expect the company to achieve operating income of 3.913 billion yuan, 4.481 billion yuan and 5.18 billion yuan from 2019 to 2021, an increase of 2.30%, 14.50% and 15.60% respectively over the same period last year; the net profit of shareholders belonging to the parent company is 321 million yuan, 451 million yuan and 600 million yuan; EPS is 0.47 yuan, 0.65 yuan and 0.87 yuan respectively, corresponding to PE of 45x, 32x and 24x. The "overweight" rating will be covered for the first time in the next six months.
Risk hint
(1) the research and development of the new generation of GPU products is not as expected; (2) the development of 5G civil business is not as expected.
