Event: on October 13, the company issued a performance forecast that the net profit for the first three quarters of 2020 is expected to be RMB 2.87-323 million, an increase of 116.01%-143.68% over the same period last year. Among them, the net profit for the third quarter alone is expected to be RMB 2.02-239 million, an increase of 239.87% RMB301.63% over the same period last year, greatly exceeding market expectations.
Results increased significantly in the first three quarters of 2020, and demand recovery came as expected.
(1) according to the announcement, the company's 2020Q1-Q3 expects to achieve a net profit of RMB 2.87-323 million, an increase of 116.01%-143.68% over the same period last year. Of which, the net profit of RMB 2.02-239 million is expected to be achieved in the third quarter alone, an increase of 239.87%-301.63% over the same period last year, with substantial growth in the first three quarters. In our review of the first quarterly report, we believe that the decline in the company's performance in the first quarter is mainly related to the spread of the overseas epidemic. From the second quarter, the company's performance is expected to benefit from the recovery of overseas demand and usher in rapid growth. 2020H1's growth in overseas revenue (+ 12.92%, accounting for 70.81% of revenue) and the sharp improvement in the third quarter confirmed our view that the recovery of downstream demand came as expected.
(2) in addition, we analyze the company's financial data for the first half of the year: ① profitability continues to rise. 2020H1, the company's gross profit margin is 53.62%, an increase of 5.68pct over the same period last year, and a net profit margin of 20.73%, an increase of 2.33pct over the same period last year. The main reason is that the scale of revenue has increased slightly and operating costs have fallen instead of rising. We believe that with the 5G commercial process, the proportion of RF and acoustic test equipment with high gross margin is expected to further increase, and profitability is expected to continue to improve. In terms of expenses during the ② period, the sales expense rate, management expense rate and financial expense rate are 10.04%, 9.50% and 0.24%, respectively, compared with the same period last year. The increase in management expenses is mainly due to the salary adjustment of managers and the increase in intermediary fees, while the decrease in financial expenses is mainly due to the impact of exchange rate fluctuations and the increase in interest income. In terms of other financial indicators of ③, as of 2020H1, the company's inventory was + 83.90% compared with the beginning of the year, mainly due to the increase in production and sales, raw materials and product reserves, and the advance payment was + 48.90% compared with the beginning of the year, mainly due to the increase in prepaid materials. Notes receivable were + 81.47% compared with the beginning of the year, mainly due to the increase in bank acceptance drafts received, and other receivables were + 43.24% compared with the beginning of the year, mainly due to the increase in export tax rebates. The sharp increase in the above data shows that the strong downstream demand for the company's products, especially overseas demand, is ushering in rapid growth.
Apple Inc iPhone year is approaching, the company is expected to fully benefit. At present, the company's customers are mainly concentrated in the consumer electronics field, and its products are mainly for the top customers in the industry, among which Apple Inc has been the company's largest customer for many years in a row.
According to the latest Apple Inc company analysis report released by Morgan Stanley, the proportion of users in China who own iPhone with an age of more than 2 years has reached 68%, which has laid the foundation for the upcoming rush to buy four iPhone 12 series products. The iPhone 12 series supports 5G for the first time, and the demand for 5G communication functions will make many Chinese users choose to upgrade and replace iPhone 12. Apple Inc's New year is coming.
We believe that the module testing and assembly equipment related to the consumer electronics field is non-standard, and the launch of Apple Inc's new products will inevitably lead to the demand for testing and assembly equipment, which will lead to an increase in the company's orders and high performance growth is expected.
The purchase of Dingtai core source equity layout integrated circuits, the industrial chain continues to improve, with long-term development potential. Before the company bought the stake in Dingtai Core Source, the company's real controllers Wang Zhaochun and Fu Lin already held 23.39% and 23.39% of Dingtai Core Source respectively. After the completion of this purchase, the company and the two real controllers hold a total of 59.665% of Dingtai Core Source, that is, more than half of the shares. We believe that integrated circuits belong to the high-end field of consumer electronics, and the company's purchase of Dingtai Core Source shares and active layout of the integrated circuit industry is expected to enhance the company's business competitiveness, improve industrial layout, broaden the intelligent manufacturing product chain, and further extend the company's product line to the field of high-end semiconductor testing equipment, improve the company's technical content and customer reserves, inject new driving force for the company's development and promote long-term business development.
Maintain a "buy" rating. The company's performance increased significantly in the first three quarters, and the demand recovery arrived as scheduled; with the advent of Apple Inc, the demand for testing and assembly equipment is expected to promote the growth of the company's orders, and high performance growth is expected.
Based on this, we revise the performance forecast for the next three years, and it is estimated that the return net profit of the company from 2020 to 2022 is 3.86,5.72 and 755 million yuan, and the corresponding PE is 32,22 and 16 times respectively.
Risk hints: 5G process is not as expected, market competition risk, downstream customers are more concentrated risk, export accounts for a larger risk, new product development and promotion is not as expected, integrated circuit business layout is not as expected.