Event: Chongda Technology released its three-quarter report in 2020, with operating income of 3.292 billion yuan in the first three quarters, an increase of 18.55% over the same period last year, and a net profit of 375 million yuan, a slight decline of 3.9% over the same period last year.
Continue to control expenses, single-quarter financial expenses will have a temporary impact. Chongda Technology achieved operating income of 1.124 billion yuan in Q3 in 2020, an increase of 21.5% over the same period last year, and its net profit was 105 million yuan, down 15.96% from the same period last year. The financial expenses are 25 million yuan, an increase of 395% over the same period last year. We think that there may be a big change in exchange gains and losses. Q3 company further reduces the sales expense rate, management expense rate, sales expense rate 3.55%, year-on-year-0.5PCT, management expense rate 5.3%, year-on-year-1.3PCT.
Continue to increase R & D investment and promote key customer strategy. The company continues to increase R & D investment, Q3 single-quarter R & D expenditure rate of 6.38%, year-on-year + 0.36PCT. In the future, the company will continue to increase the R & D investment of 5G related products, especially in the application fields of communication transmission network, core network, data center and so on, so as to prepare for the mass production of 5G base stations' high-density and high-speed multilayer board related products. The company has established a stable business relationship with a number of key customers around the world, and has entered into the core supplier of supercomputing and 5G base station products.
Holding Pannover and issuing convertible bonds to promote the construction of new production capacity. On October 16, the company announced that it had completed the acquisition of 15% of its shareholding subsidiary, Pannover, and the company held a total of 55% of Pannover, making it its controlling shareholder. Pnowe's main products include IC carrier board, and direct customers include Gale shares, AAC Technologies Holdings Inc. and other well-known domestic electronic component companies. We believe that the completion of the acquisition will help the company to quickly complete the market layout of IC carrier board and contribute to the further growth of revenue. On September 7, the company completed the issuance of 1.4 billion yuan of convertible bonds, which were mainly used for the circuit board project of Zhuhai Chongda Circuit Technology Co., Ltd. (phase I). As of 2020Q3, the company's project under construction is 682 million yuan, an increase of 121% over the same period last year, mainly due to the increase in the construction of Chongda Building and Zhuhai Chongda plant, as well as the growth of new equipment into the plant, and the company's new capacity construction continues to advance.
Maintain a rating of "better than the market". We estimate that the company's operating income from 2020 to 2022 will be 4.561 billion yuan (+ 22.4%), 6.096 billion yuan (+ 33.6%), 7.65 billion yuan (+ 25.5%), and the net profit of returning home will be 564 million yuan (+ 7.2%), 760 million yuan (+ 34.7%) and 1.079 billion yuan (+ 41.9%), respectively, and the corresponding EPS is 0.64,0.86 yuan and 1.22 yuan, respectively. According to the valuation of the comparable company, we give the company 33-38 times PE in 2020, corresponding to a reasonable value range of 21.09 yuan to 24.29 yuan, maintaining a "better than the market" rating.
Risk hint: overseas business due to the epidemic, trade frictions and other effects, the risk of extension M & An integration.