Event: on the evening of April 14, 2020, the company issued a forecast for the first quarter of 2020, predicting a net profit loss of 0-5 million yuan in the first quarter of 2020, down 100.0-133.7% from the same period last year. It is estimated that the impact of non-recurrent profit and loss on the company's net profit is about 20-2.5 million yuan.
Comments:
1. The performance is slightly lower than expected, and the impact of the epidemic and the lack of orders for new products are a drag on earnings performance.
The company forecasts a net profit loss of 0-5 million yuan in the first quarter of 2020, down 100.0-133.7% year-on-year, and the median performance is-2.5 million yuan, down 116.8% from the same period last year. The company suffered a loss in the first quarter, mainly due to the general delay in the resumption of work and production in the company and its upstream and downstream enterprises due to the epidemic; due to the lack of epidemic prevention materials and the unsmooth flow of personnel and raw materials, the company's production efficiency decreased, production and management costs increased, and it is estimated that the impact of non-recurrent profit and loss on the company's net profit is about 20-2.5 million yuan. The company's first-quarter results were lower than expected, and we believe that in addition to the impact of the epidemic, the lower-than-expected orders of downstream customers for new products are also the main reason. The company has good fundamentals and has fully resumed work. With the improvement of the epidemic in the second quarter, the construction of 5G network and the release of new product orders, profits are expected to increase.
2. with the integrated production capacity of antenna and filter, the company is expected to become a 5G RF leader.
The company is an integrated leading enterprise with the production capacity of 4G/5G base station antenna and filter while being scarce in China. 5G antennas and filters are developing in the direction of miniaturization and integration, and become the largest investment part of the wireless part. The company has obvious advantages as a scarce antenna + dielectric filter integrated production enterprise, the company itself has strong 4G/5G base station antenna R & D and manufacturing capabilities, and at the same time further strengthen the layout of the existing ceramic dielectric filter business, the future is expected to seize the opportunity of intergenerational replacement of RF products AFU. At present, the company is the mainstream supplier of ZTE metal filters, and has entered the supply list of Ericsson. 5G antennas have been supplied to ZTE in bulk and occupy a large share, while the supply of 4G antennas in the Japanese market remains stable.
3. New products + new markets determine the future growth of the company
China Mobile Limited has completed the procurement of 5G base stations in 2020, and the joint procurement of China Unicom and China Telecom Corporation will also be completed in the near future, and the domestic 5G network has entered a new stage of scale construction. This year, the construction scale of 5G base stations of the three major operators is expected to exceed 800000 stations, and domestic mainstream equipment manufacturers will occupy the main share. The company has a first-mover advantage in new RF products such as 5G antennas and 5G ceramic waveguide filters, and occupies a large share of downstream equipment vendor customers. With new products and new market layout, the company can grow in the future. The first phase of the company's ceramic waveguide filter expansion project has completed the equipment relocation and debugging, with a planned production capacity of about 1 million pieces per month. In addition, considering the subsequent growth of market demand, the company is actively preparing for the construction of the second phase 5G ceramic waveguide filter. The order of ceramic dielectric filter is expected to increase gradually with the construction of 5G network. The company's 5G small metal filters have entered Ericsson's supply chain and plan to further strengthen cooperation with Ericsson in products such as ceramic waveguide filters and antennas. At the same time, the company's base station antenna products have entered the American market, supplying small quantities for mainstream American operators, which is expected to open up a new incremental market space, achieve the rapid development of the main business of communications, and grow into a new leader of RF.
4. Domestic scarce antenna + filter integrated RF leader to maintain the "highly recommended-A" rating.
As the 5G network enters the stage of scale construction, the trend of 5G base station antenna towards miniaturization integration is obvious. As a scarce integrated manufacturer of antenna and filter in the market, the company has a strong competitive advantage. It is expected to seize the opportunity of intergenerational replacement of RF products. While stabilizing the stock market of 4G antennas and filters, the company actively arranges the business of 5G antennas and 5G ceramic dielectric filters, which will open up the incremental space of the 5G market and achieve the rapid development of the company's communications business performance. The company is currently the core supplier of ZTE, and has entered the supplier system of Ericsson, successfully expanded the American market, and is expected to break through new customers and open up new market growth space and grow into a new leader of RF. It is estimated that the net profit in 2019-2021 is about 96 million yuan, 180 million yuan and 272 million yuan respectively, corresponding to 64.3X, 34.3X and 22.7X in 2019-2021, respectively, maintaining the "highly recommended-A" rating.
Risk hints: the construction progress of 5G is not as expected, the market development of new customers and new products is not as expected, the gross profit margin of products is falling too fast, and the risk of further deterioration of the epidemic situation.