Event 1: the company released its quarterly report for 2020, with an operating income of 215 million yuan in the first quarter of 2020, an increase of 3.72% over the same period last year, and a net profit of 22.0818 million yuan, down 15.78% from the same period last year. The net profit after deduction was 19.8079 million yuan, down 23.83% from the same period last year, equivalent to 0.087 yuan per share in EPS, with a weighted average ROE of 1.03%, a decrease of 0.33% over the same period last year. The company's performance is in line with expectations.
Event 2: the company announced that it intends to sign an Investment Cooperation Agreement with the people's Government of Shuangliu District of Chengdu to invest in the construction of Chengdu Kangda Electronics Southwest Industrial Base project and set up a project company.
The first quarter results were in line with expectations: the company and its subsidiaries began to resume work in mid-February, the production of adhesives and military plates was normal and orderly, and customer orders were normal, so the revenue side achieved a small increase in the first quarter, and the overall business was less affected by the epidemic. In the first quarter, the company's gross profit margin decreased by 33.59%, 3.33pct decreased by 10.24%, and the net profit decreased by 2.32%. In terms of expenses, the company's sales expenses, management expenses and R & D expenses changed by-11.16%, 32.23% and 4.96% respectively compared with the same period last year. The increase in management expenses was mainly due to the increase in labor costs and depreciation. Research and development costs still maintain a small increase compared with the same period last year.
Building an electronic information characteristic industrial park in southwest China: the company plans to build a southwest industrial base, mainly to implement the company's strategic plan of "new materials + military science and technology". It will be on the basis of the company's existing adhesive new materials, military electromagnetic compatibility and power module business and the military electronic components testing business being acquired. Investment in the construction of aerospace electromagnetic compatibility product research and development and industrialization projects, electromagnetic compatibility standard 3m laboratory, aerospace electronic system-level equipment research and development and industrialization projects, military electronic adhesive research and sales center and electronic components testing center, will greatly enhance the technical level of the company's products, enrich product categories, expand industrial scale and increase market share. At the same time, it will build an electronic information characteristic industrial park with comparative advantages in Sichuan and even the southwest, with a total planned investment of 500 million yuan.
Endogenesis and extension, continuous layout of the military field: on the basis of the polyimide foam thermal insulation materials, military electromagnetic compatibility and power module business that have been formed in the military plate, the company intends to acquire 100% stake in Beijing Jinghanyu step by step to enter the testing field of military electronic components. Jing Hanyu mainly detects electronic components such as integrated circuits, crystal oscillators, power modules, relays, resistors, capacitors and inductors. Customers are mainly aviation, aerospace, weapons, ships, scientific research institutions and other military units. The reliability of military electronic components is the core of the reliability of all kinds of military equipment, and the testing industry has a broad prospect. After the completion of the acquisition, the company's performance is expected to be significantly thickened.
Profit forecast and investment advice: considering the acquisition of Jing Hanyu, we expect the company's net profit from 2020 to 2022 to be 1.60,2.45 and 305 million yuan, corresponding to a three-year PE of 21.9,14.3 and 11.5 times, maintaining a "buy" rating.
Risk hints: the risk of slower-than-expected macroeconomic growth, the risk of a sharp rise in raw material prices, the risk of intensified market competition, the risk of acquisition integration and goodwill impairment.