occurrences
The company released its annual performance forecast for 2020. It is expected that in 2020, the company's operating income will increase 1%-2% year on year, and the net profit of the mother will drop 20%-35% year on year. The decline in net profit of the mother is mainly caused by a sharp increase in R&D expenditure and external events such as exchange gains and losses and tariffs.
reviews
Revenue increases, risks associated with the pandemic are eliminated
The company's Q3 revenue in the second half of 2020 was +19.87% year on year, Q4 revenue was +8% to 10% year on year, and revenue for the full year of 2020 was +1% to 2% year on year.
The operational risks associated with the pandemic have been eliminated.
Return's net profit fell 20%-35% year-on-year. Apart from the high investment in R&D expenses, the reason for the decline was mainly affected by external events such as exchange rate fluctuations and tariff increases due to trade disputes. Among them, exchange rate fluctuations caused financial expenses of +269%, and trade tariffs affected $1.78 million. Later, companies could reduce such losses through tools such as hedging.
Persist in R&D and innovation to build the company's core competitiveness
Under the adverse effects of trade friction and the epidemic, the company insisted on a high proportion of R&D investment. In 2020, R&D investment accounted for more than 24% of operating income, and the size of the R&D team increased 21% year-on-year. An increase of 10pct compared to 11.67% in 2019. The company's strong R&D investment shows the company's strategic strength driven by R&D innovation. Large R&D investment will further enrich the company's product range, enhance product technology innovation, increase the added value of products, and increase domestic and international market share.
Product structure optimization, competitive advantage improved significantly
Faced with the complex competitive pattern and external situation in domestic and foreign markets, the company enhanced organizational development resilience and actively adjusted the product structure. Temperature calibration testing products in 2020 were +30% compared with the same period last year, and the comprehensive gross margin increased from 69.6% in 2019 to 71.2% in 2020 Q3. Orders for the whole year were +7% compared to the same period last year, and market competitiveness increased significantly.
Production line restructuring implemented to support process innovation
In addition to some machining equipment, the company's ongoing project in Yanqing added a new FMS production line, which has now entered the final stage of commissioning. The new automated production line can guarantee the temperature stability of continuous production over a long period of time and the reliability of the production process. The production efficiency is higher, and it can effectively solve the company's current production capacity problems. At the same time, the massive data generated by the new production system will provide data support for the upgrading of new “know how” process technology, further drive breakthroughs in R&D and innovative technology, and achieve the “stronger the stronger” effect of the sensor industry.
Investment suggestions: The company's estimated revenue from 2020 to 2022 is 292 million yuan, 376 million yuan and 451 million yuan respectively; the net profit of the mother is 62 million yuan, 97 million yuan and 114 million yuan respectively; EPS is 0.30 yuan, 0.45 yuan and 0.54 yuan respectively, and the corresponding PE is 39x, 26x and 22x respectively.
Risk warning: 1. The US dollar exchange rate continues to depreciate;
2. The control of the global epidemic fell short of expectations.