Event

On April 27, the company released its annual report of 2020, with an annual business of 2.786 billion yuan, an increase of 4.35% over the same period last year, a net profit of 247 million yuan, an increase of 22.40% over the same period last year, and a net profit of 217 million yuan, an increase of 20.09% over the same period last year. Gross profit margin 21.35%, year-on-year increase of 1.20%, net profit rate 8.86%, up 1.31% over the same period last year.

At the same time, the company released its quarterly report for 2021, with an operating income of 700 million yuan in the first quarter, an increase of 49.76% over the same period last year, a net profit of 47 million yuan, an increase of 197.10%, and a deduction of 43 million yuan in net profit, an increase of 668.45% over the same period last year. Gross profit margin was 18.42%, an increase of 4.46% over the same period last year, and net profit was 6.66%, an increase of 3.31% over the same period last year.

Brief comment

First, the profitability is increasing year by year, the first quarter demand is strong, the company's revenue and net profit are growing steadily in 2020, thanks to: 1) cost control: the company continues to strengthen cost management, vigorously promote cost down projects, achieve cost reduction and efficiency, gross profit margin increases steadily, and the expense rate decreases steadily during the period. 2) good yield, capacity climbing:

Since the subsidiary Jiangsu Bomin broke through the second-order HDI technology in 2017, the yield and capacity utilization of the production line have continued to climb, turning losses into profits, boosting the company's overall profitability; 3) Business synergy: in 2018, its business layout, customer and market, and personnel management gradually merged, synergy gradually appeared, and profit contribution increased year by year.

21Q1's revenue and net profit are growing rapidly, its profitability is significantly improved, and its gross profit margin and net profit margin are significantly higher than the same period last year, mainly due to: 1) low base: the influence of 2020Q1's low base, trade friction and COVID-19 epidemic led to poor downstream demand; 2) rising prices: the price of raw materials (such as copper foil, glass cloth, etc.) increased, and the company successfully promoted the client side to raise prices. At the same time, in recent years, the technical transformation of the production lines of Meizhou, Shenzhen and Jiangsu, the capacity release, and the average unit price of products increased; 3) strong demand: a strong demand for cars, consumer electronics, etc., the company's existing capacity is fully loaded, and the company is currently in a state of short supply; 4) New customers: solution business group newly introduced into the national network, military and other customers, high gross profit margin, 20Q4 shipments, 21Q1 began to enter the centralized settlement period, Q2 is expected to maintain high growth.

Second, high-end products and high-quality customers are gradually breaking through, and profitability is expected to further enhance the company's wide product coverage, including multilayer boards, HDI boards, high-frequency high-speed boards, flexible circuit boards, rigid-flex boards, metal substrates and thick copper plates, among which HDI boards are the company's main products, accounting for more than 40% of revenue. The company is gradually breaking through high-end products, layout HDI board long before listing, and break through second-order HDI board in 2017. At present, ceramic board and arbitrary layer interconnection HDI board are in the stage of sample and small batch production. The company has accumulated rich customer resources, the core customers include Samsung Electronics, Jabil, Gale shares, BYD, etc., and the active customers include Huawei, Lenovo, Hisense, Great Wall computer, Huaqin and iFLYTEK. With the improvement of product technology and the accumulation of customer resources, the company's profitability has improved steadily, and the gross profit margin and net profit margin have increased year by year in the past five years. In the future, with the increase in the proportion of the company's high-end products, profitability is expected to further improve.

Third, the business extends to the field of PCBA to enhance the capability of "product + solution". The company acquired Juntian Hengxun in 2018 to enhance the capability of "product + solution". Since 2018, the company has continued to increase the R & D and market development of high value-added products such as customized electronic devices, modular products and micro-core devices, and downstream applications have expanded from pre-acquisition home appliances to consumer, communications, military, automotive and other fields. and won Gree Electric Appliances, Midea, Xiaomi Group, Heertai and other high-quality customers. Juntian Hengxun and the company PCB business group coordinated development, 2018-2020 to achieve a net profit of 48 million yuan, 115 million yuan, 139 million yuan, profitability continues to become strong. With the further integration of the business layout, customer and market, and personnel management of the two business groups, the company is expected to strengthen customer one-stop service, enhance customer stickiness and accelerate the introduction of new customers.

Fourth, profit forecast

The rapid development of the company in recent years has benefited from endogenous growth and epitaxial mergers and acquisitions. In the endogenous aspect, we will continue to increase the R & D and market development of high value-added products such as 5G cloud tube, automotive electronics and characteristic business. In terms of extension, the acquisition of Juntian Hengxun, the business extends to the field of PCBA, to enhance the "product + solution" capability. With the coordinated development of endogenesis and extension, it is expected that the proportion of high-end products and high-quality customers will continue to increase, and profitability is expected to continue to improve. From 2021 to 2022, the company is expected to achieve operating income of 3.711 billion yuan and 5.13 billion yuan, net profit of 359 million yuan and 452 million yuan, and the price-to-earnings ratio of the previous share price is 15.5 and 12.3 times.

Risk hint

Juntian Hengxun integration effect is not as expected; automobile PCB promotion is not as expected; customer development is not as expected; high-end product research and development is not as expected.