China's leading optical storage service provider, and its performance continues to grow at a high rate. The company is a leading optical storage service provider in China. Its main products include optical storage media for the consumer market and optical storage devices and solutions for the enterprise market. From 2016 to 2018, the average compound annual growth rate of the company's revenue was 46.5%. The average annual compound growth rate of Guimu's net profit was 42.04%. The company expects to achieve revenue of about 489 million yuan to 597 million yuan in 2019, an increase of 21.69% to 48.74% over the previous year; it can achieve net profit of about 138 million yuan to 169 million yuan, an increase of 31.39% to 60.59% over the previous year.
Demand for hot and cold tiered storage is booming, and the company is leading technology. IDC predicts that China's data circle will increase to 48.6ZB by 2025, becoming the world's largest data circle, and the compound growth rate from 2018 to 2025 will reach 30.35%. Currently, demand for hierarchical storage of hot and cold data is increasing. Blu-ray storage has advantages such as safety, reliability, green energy saving, etc., and has obvious advantages in cold data storage, and has great market potential. The company has leading Blu-ray storage data technology. It is the only upstream optical storage material, production equipment manufacturer and optical storage manufacturer selected by the Ministry of Industry and Information Technology's “2018 Industrial Strong Engineering Memory One-Stop”. It is also the only mainland optical storage company whose BD-R low-level coding strategy has passed the certification of the International Blu-ray Alliance (only nine in the world).
Mass production of the 100G BD-R is imminent, and the company is actively laying out new technological directions. The company's business is expected to make progress in three areas in the future to help grow its performance. 1. The 100G BD-R is expected to be mass-produced in 2020, greatly enhancing competitiveness; 2. Optical storage solutions have increased rapidly. Currently, the amount and number of individual projects have remained high, accounting for more than 80% of revenue in 2018; 3. Continued investment in new technology directions such as cloud storage and holographic storage.
Profit forecast and investment advice: The company's EPS for 19-21 is estimated to be 1.11 yuan, 1.66 yuan, and 2.47 yuan respectively. Considering the company's competitiveness and growth, the first coverage gave a “prudent increase in holdings” rating.
Risk warning: the company's performance falls short of expectations, mass production of 100G Blu-ray discs falls short of expectations, holographic storage R&D falls short of expectations, etc.