Event: the company released its quarterly report for 2020, with operating income of 184 million yuan, down 23.26% from the same period last year; net profit of 39 million yuan, down 30.76% from the same period last year; and net profit of 37 million yuan, down 33.30% from the same period last year. The performance is in line with expectations.
Profitability is steadily rising, and the company's performance is expected to benefit from a recovery in overseas demand.
(1) 2020Q1, the company realized revenue of 184 million yuan, down 23.26% from the same period last year, and realized net profit of 39 million yuan, down 30.76% from the same period last year. We believe that the decline in the company's performance in the first quarter may be related to the spread of the epidemic overseas. In 2019, the company's overseas revenue accounted for 64.28%, and its main customers were American enterprises such as Apple Inc, Microsoft Corp, Alphabet Inc-CL C, Amazon.Com Inc, and so on. Since March, the epidemic in the United States began to break out, and these enterprises gradually turned to online office. Orders for original equipment may be delayed, and the superimposed company will delay resuming work from February 10, resulting in a decline in the company's performance in the first quarter.
(2) the company's performance is expected to benefit from the recovery of overseas demand. In April, the number of new cases in the United States entered the platform adjustment period, and the follow-up is expected to decrease gradually. We believe that as the epidemic in the United States is gradually under control, terminal demand is expected to rebound, new products from companies such as Apple Inc and Microsoft Corp will be launched one after another, and the relevant module testing and assembly equipment will be non-standard. The upgrading of consumer electronic products will inevitably bring demand for testing and assembly equipment, the company's orders are expected to recover, and performance growth is expected.
(3) profitability increases steadily. 2020Q1's comprehensive gross profit margin is 52.07%, showing a growth trend, and its profitability is steadily rising. We believe that with the 5G commercial process, the company's high gross margin of RF and acoustic test equipment is expected to increase, profitability will be enhanced.
Breakthroughs in various fields have achieved remarkable results, and the product system has been continuously improved. The company focuses on breaking through three major technology directions: ① 5G radio frequency testing technology. At present, the company has core technology in 5G test shielding box. In 2018, 5G test shielding box has become a qualified supplier of Qualcomm Inc, which fully proves the company's technical research and development strength, and has achieved the sales of related products; ② machine vision technology. Mainly in the industrial automation equipment to increase the machine vision image system, so that the production process of less manual process, faster production, such as high-speed glue machine, microneedle testing machine, mounting machine and other automatic testing and assembly equipment have increased machine vision modules, and have achieved the sale of related products; ③ component testing technology. Mainly in the software, optics, microelectronics industry independent research and design of a series of "high-precision", "high-efficiency", "high-quality" optical screening equipment, products such as high-precision micro-component sorting system equipment, glass surface defect detection equipment, magnetic ring detection equipment, etc., the detection speed has reached the millisecond level, and has achieved the sales of related products.
Maintain a "buy" rating. With the overseas epidemic gradually under control, terminal demand is expected to rebound, customers will launch new products one after another, company orders are expected to recover, and performance growth is expected. It is estimated that the return net profit of the company from 2020 to 2022 is 2.40,3.96 and 578 million yuan, and the corresponding PE is 32,20 and 13 times respectively.
Risk hints: 5G process is not as expected, market competition risk, downstream customers are more concentrated risk, export income accounts for a larger risk, new product research and development and promotion are not as expected.