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The company released its third quarter performance report on October 26. The first three quarters of 2020 achieved revenue of 2,329 billion yuan, an increase of 38.93% over the previous year; Guimu's net profit was 778.233 million yuan, a year-on-year decrease of 9.67%.
Comment:
The performance was in line with expectations, and the company's main business grew steadily
The company achieved revenue of 1,043 million yuan in a single quarter in the third quarter, an increase of 49% over the same period last year; Guimu's net profit was 356.15,500 yuan, a decrease of 15.27% over the previous year. The main reason for the year-on-year increase in revenue was that the company's electricity business and traditional touch display module business revenue were relatively stable; net profit declined due to the rapid increase in the amount and low gross profit of the television component business. Currently, the company invests in R&D strength for LCD displays and touch module products in the fields of smart homes, smart cars, smart cities (outdoor displays), electronic license plates, etc. In the future, it will take the market as the lead, gradually strengthen research and development of new products and technologies, and create new growth points.
Acquire North to lay out the 5G RF filter industry
During the reporting period, the company announced that it plans to invest 127 million yuan to acquire 10.1% of North's shares. North is one of the first BAW filter manufacturers in China to start developing BAW filters and has the strongest technical strength. Up to now, North has applied for a total of 381 invention patents in the field of filters, including 267 patents in China and 114 PCT patents. The number of core patents in the BAW filter field is among the highest in the world.
North is the only BAW filter supplier with Fab in China. It has production lines in Tianjin, Nanchang, and Mianyang. Among them, the Tianjin plant has two production lines, 4 inch and the first 6 inch production line in Asia with complete independent intellectual property rights and mass production delivery capacity, with a total delivery capacity of 300 million pcs/year; the Nanchang plant is the largest BAW filter chip manufacturing base in Asia. At present, the loan issue has been resolved, and manufacturing yield is gradually improving. The company expects to reach 150 million/month after full commissioning.
Empowered by 5G, there are broad prospects for BAW filters to continue to penetrate
The RF filter industry is a blue ocean of a 100 billion market. From discrete filters to filter modules, domestic enterprises have broad development space. Entering the 5G era, high frequency will drive the continuous penetration of BAW filters. After adding high-frequency bands for 5G phones, the use of filters will increase dramatically, increasing the usage of filters from 40 4G phones to about 70 of 5G phones. The penetration rate of BAW filters will exceed 50% in 2020, becoming the mainstream of the filter market.
Investment advice and profit forecasting
It is expected to achieve revenue of 32.10, 3680, and 4.267 billion yuan in 2020-2022, and achieve net profit of 130, 184, and 212 million yuan. The corresponding PE was 48, 34, and 30 times, respectively, giving an “increase in holdings” rating.
Risk warning
1) Downstream development falls short of expectations; 2) Technology research and development falls short of expectations; 3) Customer development falls short of expectations.