I. Overview of events
Recently, Huaying Science and Technology issued an announcement: 1) the revenue in the first quarter of 2017 was 1.048 billion yuan, an increase of 1.88% over the same period last year; the net profit belonging to shareholders of listed companies was 55.4137 million yuan, an increase of-8.95% over the same period last year; the net profit after deduction for shareholders of listed companies was 42.3807 million yuan, an increase of-19.39% over the same period last year, and EPS was 0.0245 yuan. 2) Huaguan Optoelectronics, a holding subsidiary, plans to invest no more than 6.5 million yuan with its own funds to add a new module automatic offset production line.
II. Analysis and judgment
2017Q1 performance is in line with expectations, indicating that the module business continues to optimize 1. 17Q1 performance is in line with market expectations. (1) the gross profit margin of 17Q1 was 21.12%, down 0.62% from the same period last year, up 0.01% from the previous year; and the net profit rate was 5.08%, down 0.35% from the same period last year. (2) the sales expense rate / management expense rate / financial expense rate is 0.49%, 7.43%, 2.44%, respectively, which is-0.03 / 1.74% higher than the same period last year.
3. We believe that the company's LCD module related business begins to pick up, as the product structure continues to be optimized towards high gross profit, and the vehicle instrument switches to liquid crystal display, the company's LCD module related product business will continue to improve.
The cover glass business is speeding up the commissioning work, and with the commissioning of the second phase of the project and the improvement of the yield, it is expected to turn losses into profits in the future.
Invest in module automatic bias production line to expand production capacity
1. Recently, Fujian Huaguan Optoelectronics Co., Ltd., a holding subsidiary, plans to invest no more than 6.5 million yuan to add a new module automatic offset production line, which will increase production by 100000 pieces per month, and is expected to increase revenue by about 20 million yuan for the whole year.
2. We believe that BOE Fuzhou Fuqing 8.5 generation line will release a large number of 23.6-inch and 23.8-inch Normal machines from the second quarter, and it is expected that it will gradually release outsourced processing demand orders.
The automatic offset production line of Huaguan optoelectronic investment module will help to enter the supply chain between BOE and TPV, and will help to improve the output process capacity of the module and obtain major customer orders in a timely manner.
To reiterate the point of view: the sixth generation TFT-LCD production line successfully lit the first screen, the production line is about to mass production 1, Hua Jiacai sixth generation TFT-LCD production line project the first 5.2 inch product has been lit successfully on March 31, 2017, the follow-up products will be mass production after customer certification. The project plans to invest 12 billion yuan to mainly produce glass substrates using IGZO technology TFT-LCD, the size of which is 1500mm × 1850mm, with a design capacity of 30,000 pieces per month, and is scheduled for mass production in the second half of this year. The production line is mainly small and medium-sized liquid crystal displays, and its applications include high-end smartphones, tablet computers, vehicle displays, industrial control displays and so on.
2. We believe that the sixth generation TFT-LCD production line project has excellent performance, high performance-to-price ratio and strong downstream market demand, which will successfully expand customers and become a new profit growth point with the gradual climbing of production capacity.
Third, profit forecast and investment suggestions
It is estimated that the EPS of the company from 2017 to 2019 is 0.24,0.38,0.52 yuan respectively. Taking into account the dilution of the additional issuance and the impact of the commissioning of the sixth generation TFT-LCD production line project, the company can be given 50-55 times PE in 2017, with a reasonable valuation of 12.0-13.2 yuan in the next 6 months, maintaining the company's "cautious recommendation" rating.
Fourth, risk tips:
1, the production capacity is not as expected; 2, the construction progress of the project is not as expected; 3, it shows that the market competition is intensified.
