Event: in the first half of 2020, the company achieved operating income of 1.303 billion yuan, an increase of 17.73% over the same period last year, and a net profit of 125 million yuan, an increase of 20.73% over the same period last year, deducting 111 million yuan of non-return net profit, an increase of 17.72% over the same period last year.

After the epidemic, the elasticity of growth was effectively released, and Jiangsu Bomin improved steadily. In the second quarter of this year, with the gradual recovery of the demand side and supply side after the domestic epidemic, the company's growth flexibility has been effectively released: quarterly operating income of 836 million yuan, close to the all-time high (2019Q4 operating income of 871 million yuan), year-on-year / month-on-month growth of 38.15% and 79.01%, and net profit of 109 million yuan in a single quarter, a record high. During the reporting period, the production capacity of Jiangsu Bomin, a subsidiary, was further released, and its operating condition continued to improve steadily. In the first quarter affected by the epidemic, the first half of the year still achieved a net profit of 29.1226 million yuan, a year-on-year / month-on-month increase of 461.90% and 10.88%. Jiangsu Bomin has built a stable profit model, which is one of the most important sources of performance elasticity for the company in the future.

The downstream structure is continuously optimized, the product structure is constantly upgraded, and the core competitiveness is gradually strengthened. At first, the downstream applications of the company's products were mainly consumer electronics and industrial control medical treatment. In recent years, under the condition of continuously increasing research and development and market development, the downstream structure has been effectively optimized. During the reporting period, the company's data / communication card contributed 35% of revenue, industrial control medical and automotive electronics contributed 10% and 11% of revenue respectively, forming a hierarchical application layout.

In addition, the company has a perfect product structure system, including multilayer board, high-density interconnection HDI, high-frequency high-speed board, rigid-flex composite board and metal substrate, thick copper plate, super-long plate and other special specification board. in production and operation, the company focuses on the production of relatively high-end products with high technical content and application fields, and at the same time promotes product specifications through continuous R & D investment, such as in the field of HDI. The company has mastered the key technologies of high-level and arbitrary layer HDI manufacturing. In the field of high-frequency high-speed board, the company is tackling important cards such as high-speed and high heat dissipation board based on 5G communication terminal, base station antenna power board, coupling calibration network board, optical module board, integrated sub-array module carrier board, multi-channel antenna substrate board, etc. With the acceleration of 5G base station construction in China, the company's technical card position to order landing in the field of high-frequency high-speed board will become an important driving force for performance growth.

Juntian Hengxun third phase performance commitment to complete nearly half, the integration effect is expected to be gradually released. In the first half of this year, Juntian Hengxun achieved a net profit of 60.6401 million yuan, an increase of 8.8% over the same period last year, and 43.12% of the third phase of performance commitment (140.63 million yuan). Taking into account the negative impact of the domestic epidemic on the resumption of work and production in various industries in the first half of this year, on the basis of Juntian Hengxun's technical advantages, industry reputation and a large number of successful cases of electronic components application and failure analysis solutions. The growth rate of the performance in the second half of the year is more likely to be higher than that in the first half of the year, which in turn drives Juntian Hengxun to complete its commitment for the whole year. In addition, the company has also extended its main business to the field of PCBA through the acquisition of Juntian Hengxun, and is gradually advancing to "electronic circuit suppliers and customized solution vendors". In the future, with the effective release of integrated synergy, it will become an important source of performance flexibility and increment for the company.

Profit forecast and investment rating: maintain the overweight rating. Jiangsu Bomin's sustained and stable profits and Juntian Hengxun's consolidated table not only thicken the company's reporting performance, but also give the company a sound driving force for future growth. The business of vehicle high-power board and communication high-frequency high-speed board is being promoted in an all-out and orderly manner. New application areas are also expected to be achieved. The company's performance in 2020-2022 is expected to be 245 million yuan, 306 million yuan and 384 million yuan respectively. The current stock price corresponds to PE 26.39,21.17,16.85 times, maintaining the overweight rating.

Risk hints: (1) Jiangsu Bomin production capacity growth rate is not as expected; (2) domestic car electronic rate and on-board PCB progress is not as expected; (3) new customer expansion is not as expected; (4) Juntian Hengxun integration effect is not as expected.