Main points of investment
Event: the company released its annual report in 2019, with an annual operating income of 16.92 billion yuan, an increase of 8.1% over the same period last year, a gross profit margin of 12.8%, a decrease of 0.5% over the same period last year, and a net profit belonging to the parent company of 620 million yuan, an increase of 8.6% over the same period last year. After deducting Fei, the net profit increased by 23.2% over the same period last year, and the net profit per share increased by 11.1%.
In the fourth quarter, the company's operating income was 4.45 billion yuan, an increase of 0.5% over the same period last year, and the net profit belonging to shareholders of listed companies fell 17.3% to 170 million yuan. The profit distribution plan for 2019 is 1.48 yuan (including tax) for every 10 shares, with no bonus shares and no capital accumulation fund to increase share capital. In the first quarter of 2020, operating income fell 1.3% year-on-year to 3.76 billion yuan, gross profit margin fell 0.1% year-on-year to 11.1%, and net profit belonging to shareholders of listed companies rose 11.9% to 110 million yuan.
The business sector grew in an all-round way and maintained growth on the basis of a high base: sales revenue increased by 8.1% to 16.92 billion yuan in 2019, trade frictions between China and the United States and the semiconductor industry declined in 2019. The company relies on the reliable competitiveness of various entities to achieve all-round growth of all business sectors and maintains good growth on the basis of a high base. Among them, semiconductor closed test revenue increased by 14.8%, engineering package and design consulting revenue increased by 19.6% and 1.3% respectively, and photovoltaic revenue grew by 27.3%. In 2019, the gross profit margin fell 0.5 percentage points from the same period last year to 12.8%. As the proportion of total project revenue with low gross profit margin was higher than that in the same period last year, the gross profit margin of each segment remained stable.
The net profit is consistent with the income growth, and the expense rate is stable during the period: in 2019, the company's return net profit increased by 8.6% to 620 million yuan, keeping pace with the income growth rate, while the net profit after deduction increased by 23.2% compared with the same period last year, reflecting the company's good profitability. During the period, the expense rate remained stable, of which the 32.3% decrease in sales expenses was mainly due to the reduction of the merger scope of selling Jiangsu Taiji shares, and the R & D expenses increased by 10.9% compared with the same period last year for advanced technology layout, due to the relatively smooth increase in income scale and expense rate, which reflects the good management efficiency of the company.
The impact of the epidemic in the first quarter of 2020 is limited, and it is expected to consolidate competitiveness in the future: the company's revenue in the first quarter of 2020 fell 1.3% year-on-year, net profit increased by 11.9%, the impact of epidemic disturbance was limited, and the company maintained performance growth based on its core strengths. The company did not disclose its performance forecast for the first half of 2020. At present, the influencing factors of the epidemic have not been eliminated and there is still uncertainty in the first half of the year. In the medium and long term, the cooperation between semiconductor closed testing business and SK Hynix Phase III is expected to continue, as the memory industry enters the uplink cycle growth space is enhanced, on the other hand, Taiji semiconductor second echelon customer development is expected to make new progress. In terms of engineering construction, National Day Science and Technology has a good market position and brand influence in the industry, and future orders in the fields of biomedicine and photovoltaic power generation will provide a higher driving force. The company's business strategy in market development and the transformation and upgrading of various entities will help the company to further consolidate the competitiveness of its main business, and we are optimistic about the company's continued growth in the future.
Investment advice: we predict that the company's earnings per share from 2020 to 2022 will be 0.32, 0.38 and 0.42 yuan respectively. The return on equity is 9.2%, 9.7% and 9.7% respectively, maintaining the buy-B recommendation.
Risk hints: the lack of demand in the memory market leads to the decline of closed test orders; the reduction of order size in the construction industry brings the risk of revenue decline; policy changes in the photovoltaic industry bring the risk of insufficient demand; the risk that gross profit margin is greatly affected by cost changes.