Benefiting from increased revenue from the platinum group metals business and increased profits in various business segments in 2019, the company's revenue and net profit increased 119.2%/34.2% respectively. The company's business profits in the four major sectors of “electromagnetic optomedicine” all showed a steady growth trend, and the performance entered a harvest period. In the future, the company's target materials business is expected to enjoy a high boom in the semiconductor industry, driving rapid growth in the company's performance and maintaining the company's “buy” rating.
The platinum group metals business increased the company's revenue significantly, and the performance of all major business segments increased. In 2019, the company achieved revenue of 10.452 billion yuan, an increase of 119.2% over the previous year. The sharp increase in revenue was mainly due to a sharp increase in platinum group metals business revenue. Annual revenue reached 8.238 billion yuan, accounting for 78.8% of the company's total revenue. In 2019, the company achieved net profit of 106 million yuan to its mother, an increase of 34.2% over the previous year. In 2019, with the exception of the optoelectronic materials business, the net profit of all other business segments of the company increased, and Youyan Medical's performance turned a loss into a profit.
The company's target materials business has developed by leaps and bounds, and will become the main driving force for the company's performance in the future. In 2019, the company successfully transitioned from mainly 4-6 inch to 12 inch target products. Key products such as copper targets, anodes, cobalt targets, etc. were supplied in large quantities, and aluminum targets, titanium targets, and tungsten target products were also delivered in batches or passed customer certification.
The company's high-purity metal target products cover many high-end customers such as SMIC, Intel, TSMC, and Beifang Huachuang. In 2019, the company's high-end metal target industrialization construction project was completed and put into operation. With the development opportunities for domestic targets brought about by the future transfer of the semiconductor industry chain to the country, the company's performance is expected to increase dramatically.
The transformation of the company's scientific research achievements and market development results have been shown, and its performance has entered a harvest period. 1) Magnetic sector: In 2019, the company merged and acquired Hongxiushan Magnetic Industry and Magnette, entering the field of high-performance NdFeB magnets for the electroacoustic field, and is expected to enjoy increased performance brought about by the boom in the high-end magnetic materials industry in the future; 2) Optical sector: sales of the company's germanium products increased in 2019, low-level germanium products achieved batch sales, and the number of infrared and optical fiber product customers increased; 3) Medical sector: formed a sales team covering the whole country, and sales of various products reached record highs.
Risk factors: The epidemic affected the recovery of downstream demand, the prosperity of the semiconductor industry fell short of expectations, and the release of the company's target material production capacity fell short of expectations.
Investment advice: The company's profits in the four major sectors of “electromagnetic optomedicine” all showed an increasing trend, and the performance entered a harvest period.
In particular, the target materials business is expected to enjoy development opportunities brought about by the high prosperity of the semiconductor industry in the future, driving rapid growth in the company's performance. Maintain the company's net profit forecast value of 186/333 million yuan for 2020 and 333 million yuan, adding the forecast value for 2022 to 569 million yuan. Corresponding to the 2020-2022 EPS forecast of 0.22/0.39/0.67 yuan/share, corresponding to the current stock price, PE is 57/32/19. The company predicts a net profit CAGR of 75% in 2020-2022. Considering that the company's current target material business profit release exceeded expectations, it was given 1.1 times the PEG valuation in 2020, corresponding to the target price of 18.1 yuan, maintaining the company's “buy” rating.
