Event: the company's 2020 revenue was 1.677 billion, year-on-year + 33.4%, net profit 265 million, year-on-year + 50.2%; deduction of non-return net profit 218 million, year-on-year + 38.7%. The company pays a cash dividend of 1.85 yuan (including tax) for every 10 shares, with a dividend rate of 30.6%.
Main points of investment
Layout of wearable devices drives the company's rapid revenue growth
The company's performance grew rapidly in 2020. The annual revenue was 1.677 billion yuan, + 33.4% compared with the same period last year, and the net profit returned to the mother was 265 million yuan, + 50.2% compared with the same period last year, deducting 218 million yuan from non-net profit, + 38.7% from the same period last year. The net operating cash flow was 333 million yuan, + 410.2% compared with the same period last year, a record high. The substantial increase in revenue is mainly due to the successful layout of wearable device testing business: the company acquired Oliton wholly in 2020, and the layout of wearable equipment testing. Oliton is committed to providing automatic intelligent assembly and testing equipment for wearable products, and is an important supplier in the field of Apple smartwatch testing in China. From the beginning of the third quarter, Oliton has been officially included in the scope of the company's table. For the whole year, the subsidiary achieved revenue of 449 million yuan, + 674.1% compared with the same period last year, of which Ollitone achieved revenue of 304 million.
Oliton's performance is committed to the completion of the agreement plan, which will continue to drive the company's revenue growth in the future. According to the transaction agreement, the cumulative non-return net profit deducted by Oliton from 2019 to 2022 is not less than 419 million yuan. By the end of 2020, Olitong has completed a cumulative net profit of 285 million yuan on gambling, and the performance growth has exceeded the agreement plan. At present, Oliton has sufficient orders on hand, and it is expected in the company announcement that the project that has passed the prototype verification in 2020 will be able to obtain an order of about 250 million-300 million yuan. We expect that with the launch of Apple's iWatch and Airpods new products, orders will be further released and Oliton's performance will maintain high growth, further driving the company's overall revenue.
The profitability is stable and rising, and the ability to control fees remains stable.
The company's 2020 comprehensive gross profit margin of 48.1%, year-on-year + 1.5pct, net profit rate of 15.8%, year-on-year + 1.77pct, profitability steadily increased, mainly due to the optimization of cost control in 2020. During 2020, the expense rate was 31.9%, year-on-year + 1.01pct, of which the sales, management (including R & D) and financial expense rates were 6.5%, 24.07%, 1.31%, respectively, compared with the same period last year-0.79pct/+0.22pct/+1.58pct. The increase in the rate of administrative expenses is mainly due to the increase in employee share payments and the increase in depreciation expenses caused by the consolidation of Oliton statements.
The R & D cost is at a high level, plus semiconductor test equipment.
The company spent 253 million yuan on R & D in 2020, + 30.9% compared with the same period last year, and the R & D expenditure rate was 15.06%, year-on-year-0.28pct.
The substantial increase in R & D expenses is mainly due to (1) the company actively arranges semiconductor business and increases R & D investment, including two new subsidiaries in Singapore and South Korea, which are mainly engaged in semiconductor testing equipment research. (2) in terms of flat panel testing business, the company closely follows the iteration of flexible OLED technology, comprehensively upgrading testing technology to OLED, and increasing the technical reserve of new generation display technologies such as MiniLED and Micro-LED.
Strategic layout of semiconductor testing business, domestic alternative space may bring new opportunities for the company at the industry level, semiconductor testing business domestic alternative space is huge. The chip testing machine industry can be divided into four categories: SOC chip, memory chip, analog chip and radio frequency testing machine. Among them, the technical difficulty of the analog testing machine is low, the domestic production rate has reached 85%, and Huafeng Measurement and Control is the industry leader; the technical difficulty and market space of SOC and memory chip testing machines are large, which are mainly monopolized by Edwin and Terrida, two major global semiconductor testing equipment leaders, and the domestic alternative space is huge.
At the company level, the company continues to make breakthroughs in semiconductor testing business. The company is the only customized BMS chip testing equipment solution provider in China. In terms of standardized testing equipment, it is one of the few domestic enterprises that can independently develop SOC chip test equipment. The self-developed E06 series test system has strong market competitiveness and high performance-to-price advantage in the core performance indicators. At present, the company's SOC chip testing equipment has successfully passed the verification of important customers and began to obtain mass production orders. We expect 21-year growth to accelerate with the expansion of the company's semiconductor business and the release of 20-year-old orders.
Earnings forecast and investment rating: we have raised the net profit of 327,000,000 million in 2021-2022 to 3.84 / 542 million, and expect net profit of 780 million in 2023, corresponding to the current share price PE of 41,29,20 times, maintaining the "overweight" rating.
Risk hint: the investment in the panel production line is not as expected; the business development of semiconductor testing equipment is not as expected.