Core ideas:
In 2019, the company achieved revenue of 2.19 billion yuan, an increase of 37.07% over the same period last year; net profit of 429 million yuan, an increase of 57.01% over the same period last year; revenue of 1Q2020 company reached 406 million yuan, down 7.73% from the same period last year; and net profit of return of mother was 21.02 million yuan, down 74.39% from the same period last year.
Orderly expansion of production capacity leads to rapid growth of performance. In 2019, with the orderly expansion of production capacity and full orders, the company's performance grew rapidly. In the first quarter, due to the impact of novel coronavirus's epidemic on the company's return to work after the Spring Festival, although the company had sufficient orders, the production capacity was low because many employees could not get to work in time after the company resumed work on February 10. the company overcame objective difficulties and actively promoted the resumption of work and production until mid-March. The company's production has fully returned to the normal level. Based on the above factors, the company's main business revenue and profits decreased compared with the same period last year.
The rise of domestic brands is good for local EMS enterprises, and the head customers help the company's performance break out. The market share of domestic brands continues to increase, driving the rapid development of local EMS manufacturers. In order to meet the capacity demand, the company uses IPO and set to increase timely production to solve the capacity bottleneck; the large-scale construction of 5G base stations leads to the growth of network communication equipment demand, and the company plans the capacity of routers and switches to meet the downstream demand; 5G commercial promotion of a new round of replacement, mobile phone OEM prices have broad prospects. Automotive electronics has huge room for growth, the company's forward-looking layout to develop ATOL for customers to enter the North American and European markets; the company acquires the Indian company Vsun to expand overseas, sharing the incremental market dividend.
Profit forecast and rating. If we consider the impact of the new production capacity in this private offering plan, we estimate that the company's EPS in 20-22 will be 1.12 EPS 1.42 shock 1.82 yuan per share, corresponding to PE 1.82 times that of 25-19-15. We believe that the company is expected to maintain sustained and rapid growth in the future, benefiting from the change in the industrial pattern of domestic terminal EMS on the one hand and the growth of hardware in the 5G era on the other, taking into account the prospect of high growth of the company. With reference to the valuation of comparable companies, we give the company a 20-year valuation of 35 times PE, with a fair value of 33.47 yuan per share, maintaining a "buy" rating.
Risk hints: the continuing risk of the epidemic; the 5G penetration rate is lower than the expected risk; major customers rely on risk.