Main points of investment
Event: on April 27, Sega Technology's 2019 performance revealed that its operating income in 2019 was 1.871 billion yuan, a year-on-year growth rate of 46.21%, and its operating profit was 121 million yuan, an increase of 127.43% over the same period last year. In 2020, Q1 realized operating income of 261 million yuan, down 25.67% from the same period last year, and realized net profit of-4 million yuan, down 124.01% from the same period last year.
Antenna RF market demand increased, performance continued to exceed expectations: the rapid growth of 5G mobile communication equipment products contributed to the better-than-expected performance. During the reporting period, the company's production and sales of radio frequency devices and antennas increased significantly, with antenna revenue of 654 million yuan, an increase of 171.45% over the same period last year. Revenue from radio frequency devices was 470 million yuan, an increase of 50.14% over the same period last year. Mainly in 2019 for the first year of 5G construction, related 5G products market demand increase, sales growth, while the company increased stock accordingly.
Continue to increase R & D expenditure on communications, forward-looking capacity layout has been opened: the company attaches great importance to the research and development of new products and technologies, and always regards technological innovation as the driving force for the sustainable development of the enterprise. In order to maintain its leading position in technological innovation, the company has always adhered to the development strategy of "strengthening enterprises through science and technology", constantly increasing investment in technological research and development, and improving technical equipment and scientific research conditions. In 2019, the company spent 81 million yuan on R & D, accounting for 4.36% of business income, an increase of 75.17% over the same period last year.
Seize the opportunity of 5G base station construction, mobile communication equipment give play to new momentum: the company's mobile communication equipment business firmly seizes the opportunity of domestic 5G base station construction in the first year: 1, to achieve 5G antenna smoothly into the ZTE Corporation core supplier system, to achieve a qualitative leap; 2, the new customer Ericsson began to enter the stage of batch supply in the third quarter, cultivating new profit growth points. 3. Overseas platform Dengyo USA won the first order at the end of 2018, and the company's antenna products successfully entered the North American market and opened up a new market. 4. the acquisition of Jetband Electronics and the layout of ceramic waveguide filter production capacity in advance, and the construction of the first phase of its production capacity has now been completed.
Earnings forecasts and investment ratings: we believe that revenue will continue to benefit from the leading R & D and manufacturing capabilities of integrated filter and antenna integration. It is estimated that the EPS from 2020 to 2022 will be 0.84,1.17,1.52 yuan respectively, corresponding to the PE of 42max, 30max, 23x, maintaining the "buy" rating.
Risk tips: 5G promotion is not as expected; single major customer loss; increased competition in the communications sector; the risk of market share loss and price decline.
