The company's overall performance in 2019 is in line with expectations.
In 2019, the company achieved revenue of 5.86 billion yuan, an increase of 203.75% over the same period last year, a net profit of 65 million yuan, an increase of 6.35% over the same period last year, a net profit of-2.137 billion yuan, a decrease of 138.37% over the same period last year, and a net operating cash flow of 2.163 billion yuan, an increase of 76.31%. Of this total, 19Q4 achieved a revenue of 1.774 billion yuan, an increase of 58.42% over the same period last year, and a net profit of 765 million yuan, an increase of 133.39% over the same period last year. The net profit after deducting non-profit was-641 million yuan, a decrease of 23.42% over the same period last year, and the net operating cash flow was 2.351 billion yuan, an increase of 132.81%. The company's overall performance in 2019 is in line with expectations.
Revenue continued to grow at a high level in the first quarter of 2020 compared with the same period last year.
In the first quarter of 2020, the company achieved revenue of 1.763 billion yuan, an increase of 47.31% over the same period last year, a net profit of-581 million yuan, a decrease of 74.47%, and a net profit of-584 million yuan, down 69.20% from the same period last year. The net operating cash flow was-135 million yuan, an increase of 48.22% over the same period last year.
The release of LCD panel business capacity drives the company's revenue to grow rapidly.
The company Xianyang 8.6 generation LCD panel production line achieves full production in the first phase in 19Q1 and the second phase in 19Q3. Driven by this, the company's revenue has continued to grow rapidly since 2019 compared with the same period last year.
In 2019, the company's LCD panel income was 4.659 billion yuan, accounting for 79.5% of revenue; LCD panel related, intermediate materials income 549 million yuan, accounting for 9.37% of revenue; glass substrate income of 321 million yuan, accounting for 5.48% of revenue; glass substrate related, leasing business income of 193 million yuan, accounting for 3.3% of revenue.
In 2019, the company added 8 customers at home and abroad, such as Samsung, LG, VESTEL, TCL ace, SCBC, XIAOMI, Zhaochi and so on. A total of 11.34 million LCD panels were produced and 1177 million were sold and shipped, with a production and sales rate of 103.83%.
In 2019, the substrate glass business operated a number of 7.5 generation lines and an 8.5 production line, the output increased by 60% year-on-year, the sales volume increased by 36% year-on-year, and the revenue of the main business increased significantly, with an increase of 49%.
As the LCD panel price in 2019 as a whole in the downward channel, and the overall price is low, with the growth of revenue, the company's overall operating loss in 2019 expanded.
The production reduction of Korean factory is expected to lead to the gradual improvement of 20H2 panel price.
Affected by the local production line reduction announced by LG at the beginning of the year, the price of 20Q1 LCD TV panel increased significantly compared with the previous year. However, due to the low price base, the company's main 50-inch LCD panel price has not yet reached the company's product cost line, 20Q1 with the growth of revenue, operating losses have expanded.
20Q2 affected by the spread of the overseas epidemic on the demand side, LCD TV panel prices once again showed a month-on-month decline. However, with Samsung announcing its full withdrawal from the LCD panel market at the end of March 2020, supply and demand in the 20H2 market is expected to improve gradually, and prices are expected to enter the upward range again. The company's operating performance is also expected to improve gradually.
At present, Xianyang 8.6G LCD line has gradually completed the expansion, after the expansion, the production capacity of the production line will reach 132K. The enhancement of scale effect is expected to further lead to the decline of the company's operating costs.
The company plans to achieve business income of 8.471 billion yuan in 2020, including 7.934 billion yuan for LCD panel business and 570 million yuan for LCD substrate glass business.
Glass substrate is progressing smoothly, and domestic supply is expected to gradually form a high-generation line to break through the third quarter of 2019. The company (China) the first high-generation (G8.5 +) overflow liquid crystal substrate glass production line with independent intellectual property rights has been successfully completed and ignited in Hefei industrial base, and the product has been successfully offline in January 2020 and has now entered the stage of user authentication. The follow-up company will steadily and rapidly expand the scale of G8.5 + substrate glass industry. The industrialization of high-generation substrate glass will become a new engine for the company's high-quality development.
The company's original G6 glass substrate production line has been gradually transformed into a G7.5 high-efficiency production line, and the management effect has been greatly improved. The G8.5+ production line has been successfully completed and ignited, and the trial production has been carried out as planned. At present, it has operated two G7.5, one G8.5 + and one G8.5 back-end production line. Optimistic about the company's glass substrate production line domestic supply breakthrough.
Investment rating and valuation
We forecast that the company's revenue from 2020 to 2022 will be 79.86,95.56 and 9.68 billion yuan respectively, the net profit of home ownership will be-2.63,4.24,773 million yuan, the EPS will be-0.07,0.12,0.22 yuan, corresponding to PE will be-56XMagne 35X 19x. The short-term LCD TV panel price fluctuation will have an impact on the company's overall profit, taking into account the gradual improvement of LCD TV panel profit in the future. As well as the broad domestic alternative space for glass substrates, we believe that the reasonable valuation of the forward company is 1.1-1.3X PB, given a "neutral" rating.
Risk hint
The epidemic continues, LCD downstream demand and prices fluctuate sharply; the company's production capacity release progress is not as expected.
