Event

According to the annual report released by the company in 2019, the company achieved revenue of 516 million in 2019, an increase of 28.57% over the same period last year, and a net profit of 138 million yuan, an increase of 31.53% over the same period last year.

Brief comment

The performance was in line with expectations, and the amount of individual projects increased significantly, leading to an increase in gross profit margin. According to the annual report released by the company in 2019, the company achieved an income of 516 million in 2019, an increase of 28.57% over the same period last year, and a net profit of 138 million yuan, an increase of 31.53% over the same period last year. From a business point of view, the revenue of optical storage products and equipment reached 141 million yuan, an increase of 80.17% over the same period last year, mainly due to a substantial increase in sales. In 2019, sales of 888 sets were achieved, an increase of 126.53% over the same period last year. The high growth of optical storage products and equipment was mainly due to the substantial increase in shipments of ZL2520 in Beijing Dongyun, military industry and other projects, and the gross profit margin increased by 0.06pct, which basically remained stable. The revenue of the optical storage solution reached 371 million yuan, an increase of 16.1% over the same period last year, and the gross profit margin increased by 4.97pct. The company's optical storage solution implemented 12 projects this year, a decrease of 60% compared with the same period last year, but the amount of individual projects reached 30.9266 million yuan, an increase of 190.24% over the same period last year. The company focused on large projects, and its gross profit margin also increased. In 2019, the company achieved a net profit of 138 million yuan, an increase of 31.53% over the same period last year. The net operating cash flow was 37.1064 million yuan, an increase of 259.31% over the same period last year. The operating cash flow has improved, and with the continuous improvement of the company's project quality, cash flow is expected to further improve. At the end of 2019, the company's accounts receivable was 618 million yuan, an increase of 65.78% over the same period last year. The main reason is that the company is in the early stage of expanding the market scale and accumulating industry cases, and has adopted a relatively loose credit policy on accounts receivable in order to obtain business resources, which makes the growth rate of accounts receivable faster.

The sales network has been continuously improved and the investment in R & D has continued to increase. During 2019, the company's expense rate was 19.98%, an increase of 2.93pct over the same period last year, of which the sales expense rate was 4.07%, an increase of 0.85pct over the same period last year, mainly due to the company's expansion of sales scale, the establishment of branches and the layout of the national sales network; the management expense rate was 4.65%, a decrease of 1.43pct compared with the same period last year The R & D expenditure rate was 9.49%, an increase of 2.51pct compared with the same period last year, mainly due to the company's continued increase in R & D investment in large-capacity storage media, hardware and software, with an increase of 35 R & D personnel, an increase of 87.5% over the same period last year. At the same time, the company's R & D expenditure was fully expended, reflecting business quality; the financial expense rate was 1.77%, an increase in 1pct compared with the same period last year, and the company's interest expenditure increased.

Optical storage has become the development trend of big data era, and the market space is broad. In the era of big data, the data showed explosive growth. IDC expects China's data circle to grow from 7.6ZB in 2018 to 48.6ZB in 2025, with a compound growth rate of 30.4%, of which 80% of the data will become cold. Optical storage has great advantages in cost, data storage life, security and other aspects, so it is more suitable for cold data storage, and has large application space in government, public security, medical, archives and other fields. it is expected that the scale of cold storage market will reach 80 billion in the future. At present, the domestic Blu-ray storage enterprises are mainly Yihualu, Suzhou Mutual Union, the company has independent controllable advantages, the future is expected to further expand the market.

The company's core technology can be controlled independently, and high-capacity CDs are expected to be launched in the first half of the year. The core technology of the company is "BD-R low-level coding strategy". In mainland China, only one company has passed the BDA certification, and only 9 enterprises in the world have passed the certification. With the company's mastery of the underlying coding strategy technology, the company can not only produce its own media, but also customize and optimize the purchased media and optical drives. At present, the company can mass produce 25g Blu-ray discs, and 100GB products are expected to be launched in the first half of this year, which will further enhance the competitiveness of the products.

Profit forecast and investment rating:

The company's performance is in line with expectations, the amount of individual projects in the solution business has increased significantly, and the improvement of project quality has led to an increase in gross profit margin. Optical storage has become the development trend of big data era, benefiting from the growth of industry application market and the increase of green data center projects, the company, as a Blu-ray storage enterprise with the layout of the whole industry chain and mastering the core technology, with the increase of R & D investment and the continuous improvement of the sales network, it will still maintain rapid development in the future. It is estimated that the net profit of amethyst storage from 2020 to 2021 is 2.0 yuan and 273 million yuan, respectively, up 44.5% and 36.5% from the same period last year, with a "buy" rating of 51 and 38 times the previous share price.

Risks and hints: the future market competition risk of large-capacity optical disc, the risk of research and development and industrialization of holographic optical storage technology under the new technology cycle, the large book amount of accounts receivable and the risk of accounts receivable recovery, high customer concentration and the risk of major customer fluctuations.