I. Overview of events
On August 27, the company released its mid-2020 report that in the first half of 2020, the company achieved operating income of 429 million yuan, an increase of 5.85% over the same period last year, and a net profit of 85 million yuan, an increase of 15.50% over the same period last year.
II. Analysis and judgment
Performance rebounded in the second quarter and profitability continued to improve.
In the second quarter of 2020, revenue reached 245 million yuan, an increase of 33 percent over the previous quarter, and the net profit returned to the mother was 46 million yuan, an increase of 18 percent over the previous quarter. In the first half of the year, the company's industrial automation equipment realized business income of 345 million yuan, an increase of 3.8% over the same period last year, equipment accessories business revenue of 58 million yuan, down 1.7% from the same period last year, and technical services revenue of 25 million yuan, an increase of 79% over the same period last year.
The company's profitability has grown steadily, with a consolidated gross margin of about 2.1 percentage points higher than in 2019 in the first half. The main reasons for the growth of the company's performance and profitability include: 1) the continuous improvement of the prosperity of the consumer electronics industry downstream of the company; 2) the quality of customer resources; 3) the continuous innovation of technology and products; and 4) the continuous launch of new business and new products.
Export business accounts for more than 70%. Apple Inc is the company's main customer. At present, the company's export business accounts for more than 70%, which is still the main part of the company's revenue. Apple Inc accounts for a relatively high proportion of core consumer electronics customers. Apple Inc accounts for more than 20% of the company's revenue. Among them, the proportion of brands such as Microsoft Corp and Cisco Systems is also gradually increasing, and the proportion of the company's consumer electronics business is still small.
The volume of automatic testing equipment can be expected, which can effectively reduce the cost.
The company's automation equipment mainly includes newly made automation equipment and reformed automation equipment, in which new automation equipment mainly includes ICT testing equipment and FCT testing equipment, etc.; equipment accessories mainly include clamping tools, components and parts; technical service mainly refers to the installation and commissioning of automatic testing equipment, operation and maintenance support, regular inspection, etc.
The company's main products cover electrical (ICT/FCT), radio frequency, acoustics and optical testing equipment, downstream mainly includes automotive electronics, consumer electronics, medical electronics and other high-growth industries, customer structure quality, volume can be expected, scale effect month-on-month improvement, the cost will be gradually reduced.
III. Investment suggestions
It is estimated that from 2020 to 2022, the company will achieve operating income of 11.67 billion yuan, net profit of 2.06 million yuan and net profit of 3.13 billion yuan. The current stock price corresponding to PE is 60-39-27 times, and the current dynamic price-earnings ratio is lower than the central level of historical valuation. Considering the high growth of downstream consumer electronics, automotive electronics and other industries, the company, as a leader in equipment supply, is expected to maintain high growth and can be bullish for a long time, covering it for the first time and giving a "recommended" rating.
Fourth, risk tips:
The risk of macroeconomic fluctuation, the downstream prosperity is lower than the expected risk.