CNAC Infrared Project Sun Company Anhui Guangzhi signed an "equipment sales contract" with Instec, with a total contract of 186 million yuan, mainly purchasing the equipment needed for the construction of the infrared project plant. We believe that with the production and use of key equipment, the company's infrared project capacity is expected to be gradually released, which will have a positive impact on future performance.
Maintain a "buy" rating.
Sign equipment sales contract to speed up the construction of infrared project. During the period from July 7, 2020 to July 14, 2020, Anhui Guangzhi, the company's shareholding company, signed four "equipment sales contracts" with Zhongyi Instek Import and Export Co., Ltd., with a total contract amount of 186 million yuan. mainly used for the purchase of equipment for plant construction of infrared projects. The implementation of the above contract has no impact on the company's operating results this year, but with the production of key equipment, we believe that the company's infrared project capacity is expected to be gradually released, which will have a positive impact on the company's future performance.
Focus on product structure upgrading, injection infrared laser business. The company is mainly engaged in the research and development, production and sales of processing products of high-performance aluminum alloy materials and its parts, deeply engaged in high-end aluminum technology, and then invested in infrared projects through capital operation to expand downstream application business. The company's traditional business is tilted from the nuclear field to the non-nuclear field, and the advantage of customer diversification is gradually highlighted. The company adjusts its product structure, the overall operating loss narrows, the 2020Q1 expense rate decreases, and revenue increases by 30.35% compared with the same period last year, and is expected to restore profitability in the future.
Emerging business promotes extension development and enhances market competitiveness. According to Maxtech International, the size of the global infrared market will reach 18.3 billion US dollars in 2023, among which there is plenty of room for growth in Asia. In the military infrared field, the proportion of equipment costs is increasing as a result of military information, and Maxtech International expects the market size to reach 10.8 billion US dollars in 2023; in the civil infrared field, the development is driven by cost reduction, and the application of security and fire protection, Maxtech International expects the market size to reach 75 US dollars in 2023. The company's infrared projects include infrared optical materials, infrared optical lenses, infrared detectors, laser lenses, laser devices, radiation detection materials, etc., to achieve large-scale production of the whole industry chain from materials to devices and then to modules. The company invests in the industrialization project of infrared optics and laser devices to achieve the integrated development of the military and civilian fields, which will help the company to continuously enhance its market competitiveness.
Risk factors: contract performance risk; infrared project construction risk less than expected; raw material price fluctuation risk.
Investment suggestion: the homing net profit forecast of the maintenance company from 2020 to 22 is 1.151,212 million yuan respectively, and the corresponding EPS forecast is 1.270.56 billion yuan respectively. Maintain a "buy" rating.