Events:
According to the company's mid-2020 report, the company's revenue in the first half of 2020 was 883 million yuan, down 2.93 percent from the same period last year, and its net profit was 32.46 million yuan, down 46.29 percent from the same period last year. In the second quarter of 2020, the company achieved revenue of 622 million yuan, an increase of 11.36% over the same period last year, and a net profit of 36.02 million yuan, down 21.01% from the same period last year.
Our comments are as follows:
The impact of the epidemic gradually recovered, revenue began to grow again in the second quarter, mobile communications business orders were saturated, and shipments continued to grow.
COVID-19 's epidemic situation led to delays in the progress of the entire industry chain, such as network construction, bidding by operators, and procurement by equipment manufacturers, which adversely affected the company's performance in the first quarter. The company's overall production and operation gradually returned to normal in late March this year, and the company's revenue began to grow in the second quarter, but capacity utilization and production management costs are still affected to a certain extent, affecting profit margins to a certain extent. From the perspective of orders, the company's mobile communications business (4G/5G filters and antennas, etc.) was saturated in the second quarter, and shipments of RF devices and antenna products increased significantly compared with the previous quarter, which laid a good foundation for the company's continued growth in the future.
Facing the 5G era, the company's product line is perfect, comprehensive layout of antennas, metal cavity filters, ceramic filters and other products, smooth expansion in Ericsson and other new customers, the North American subsidiary began to make a profit, ceramic filters and other new products are shipped in bulk. The company's products cover the main technical routes of 5G in the future, and the market competitiveness is outstanding.
The company's main customers of RF devices and antennas include mainstream communications equipment suppliers such as ZTE Ericsson and Nippon Electric. After the company's 5G small metal cavity filters were successfully introduced into Ericsson supplier system in 2019, the company is gradually and orderly promoting ceramic waveguide filters and antennas into Ericsson's supplier system.
The company's overseas subsidiary Dengyo USA began to make a profit during the reporting period, laying a solid foundation for the company to continue to expand into the North American antenna market. The ceramic waveguide filter products of the subsidiary Jetband Electronics were shipped in bulk in June. At present, 5G RF devices are in the stage of both miniaturized metal cavity filters and ceramic filters. The company's product line covers the whole product line of 5G antennas, metal cavities and ceramic filters. The main products are delivered in batches to ZTE, Ericsson and other global first-line equipment manufacturers. The technical strength and competitiveness of the products are outstanding. With the continuous acceleration of 5G scale construction. It is expected to continue to benefit from the demand growth brought about by the construction of 5G network.
Profit forecasts and investment advice:
The company's traditional precision box business has developed steadily, the technology and mass production capacity of antenna and filter products are outstanding, and new customers such as North America and Ericsson have expanded smoothly. As a leading domestic supplier of 5G antennas and filters, the company is expected to continue to benefit from 4G deep coverage and 5G network scale construction. Due to the influence of the epidemic, the 20-21 net profit of the company is adjusted from 2.60 yuan and 324 million yuan to 1.02 yuan and 121 million yuan respectively, corresponding to 54 times in 20 years and 45 times in 21 years. The net profit in 2022 is expected to be 132 million yuan, maintaining the "overweight" rating.
Risk tips: downstream capital expenditure is lower than expected, industry competition is higher than expected, and technology R & D risk
