Event: the company released its semi-annual report on August 3, 2020, with revenue of 23.465 billion yuan in the first half of the year, down 0.53% from the same period last year, and net profit of 502 million yuan, an increase of 2290.28% over the same period last year.

Comments:

1. The performance is in line with expectations, and profitability continues to increase. In the first half of 2020, the company achieved operating income of 23.465 billion yuan, down 0.53% from the same period last year, mainly due to the independent development of Android touch business. The net profit of the company was 502 million yuan, an increase of 2290.28% over the same period last year. The gross and net interest rates of the company in the first half of 2020 were 10.77% and 2.27% respectively, an increase of 0.69 and 2.12 percentage points over the same period last year. The increase in profitability is mainly due to the growth of orders from some major customers, the divestiture of loss-making businesses, and the continuous improvement of the company's profitability.

two。 The capacity utilization rate of optical optoelectronic products has been improved. In the first half of 2020, the company's sales revenue of Android camera modules reached 11.712 billion yuan, down 0.02% from the same period last year, and shipments reached 292 million, an increase of 24.51% year-on-year, with a comprehensive gross profit margin of 11.08%.

The sales revenue of non-Android video module products reached 3.673 billion yuan, an increase of 95.95% over the same period last year, the number of shipments reached 55 million, an increase of 30.34%, and the comprehensive gross profit margin reached 10.94%, an increase of 11.24% over the same period last year. Thanks to the growth of optical prosperity, the shipments of camera modules and optical lenses continue to grow, and the optical leading position has been strengthened.

3. 3D Sensing business is growing rapidly. In the microelectronics business, revenue from fingerprint recognition modules fell 25.70% year-on-year due to increased competition in the industry and price pressure. Due to the increase in orders from international major customers and the gradual increase in product penetration, 3DSensing achieved revenue of 1.763 billion yuan in the first half of 2020, an increase of 79.83% over the same period last year, and the comprehensive gross profit margin increased by 12.53% over the same period last year. The company will continue to strengthen the research and development of 3DSensing to promote the sustained growth of related business.

Profit forecast: we estimate that the company's revenue in 2020-2022 will be 542.92 billion yuan, 63,2.552 million yuan, and net profit will be 15,442.14,2731 billion yuan, maintaining the "highly recommended" rating.

Risk tips: increased competition in the industry; deterioration of the macro environment; progress of major customers is not as expected.