Main points of investment
Event: on April 29, Chongda Technology announced its annual report in 2019 and Q1 performance in 2010. the annual operating income in 2019 was 3.727 billion yuan, an increase of 1.95% over the same period last year, and the net profit was 526 million yuan, down 6.16% from the same period last year. Q1 realized operating income of 932 million yuan in 2020, an increase of 2.94% over the same period last year, and realized a net profit of 126 million yuan, an increase of 1.61%.
Short-term performance is under pressure, income growth is slowing: affected by Sino-US trade friction, the export-oriented sales structure has been unable to bring sufficient performance momentum to the company, performance growth has slowed, and net profit has declined briefly. In 2019, the gross profit margin was 30.62%, a decrease of 2.32pp compared with the whole of 2018, and a net sales margin of 14.11%, a decrease of 1.22pp compared with 2018. However, with the release of domestic performance momentum in 2020, the net profit of Q1 is increasing.
Adjust the product layout and actively expand domestic customers: in 2019, the company successively acquired 20% equity of Sandeguan, 40% equity of Punoway and 20% equity of Dalian Electronics, and extended the products to FPC, IC board and other fields to achieve the coverage of PCB full range of products. The effect of medium-and large-volume layout continues to show, accounting for 69.96% of the sales area of large-volume orders in mid-2019, while strengthening the layout of high-end products such as HDI, strengthening the strategy of domestic key customers, and actively building domestic sales teams and marketing service networks to minimize the impact of Sino-US trade frictions.
Increase R & D expenditure and reserve core competitive advantage: the company's R & D investment has increased significantly, with R & D expenditure of 218 million yuan in 2019, an increase of 28.20% over the same period last year. And it has successfully realized the mass production of high-density, high-speed multilayer plates used in supercomputers and 5G base stations. In the future, we will continue to increase the R & D investment of 5G related products, especially in the application fields of communication transmission network, core network, data center and so on, so as to further improve the overall R & D strength of the company, so as to enhance the competitiveness of the company's products.
Benefit from the acceleration of 5G, the new momentum of Xu Li's performance development: Chongda technology communications industry product applications accounted for 35%, and has established stable business relationships with a number of key customers around the world, and entered into the core supplier of supercomputing and 5G base station products, indicating that the development of the company has stepped onto a new level, and it will be an important starting point for the company's performance improvement in the future.
Profit forecast and investment rating: we continue to be bullish on the future performance of Chongda Technology. It is estimated that the operating income from 2020 to 2022 will be 4.51 billion yuan, 5.322 billion yuan and 6.227 billion yuan respectively, with a net profit of 706 million yuan, 922 million yuan and 1.177 billion yuan, and EPS of 0.80,1.04,1.33 yuan respectively.
Risk hint: 5G orders are not as expected; capacity release is not as expected.