Incident: Tony Electronics released its 2018 quarterly report. Q1 achieved revenue of 295 million yuan, an increase of 211% over the previous year, and achieved net profit of 88 million yuan to the mother, an increase of 403% over the previous year, in line with market expectations.
The King Kong cable business continues to gain strength, and the company's performance has exploded. In Q1 2018, Tony Electronics achieved revenue of 295 million yuan, an increase of 211% over the previous year, and the net profit of the mother was 88 million yuan, an increase of 403% over the previous year. The gross margin was 48.45%, an increase of 8.26 percentage points over the same period last year. Cost control was strengthened after the company went public, and the cost rate declined during the 2018Q1 period, reaching 14.51%, down 0.42 percentage points from the same period last year. The main reason for the overall increase in the company's performance is the explosive growth of the King Kong wire business. It is estimated that in 2018 Q1, the King Kong line business will account for more than 60%, and the profit will account for more than 65%. Compared with the full year of 2017, the contribution rate of nearly 50% will continue to increase.
Continuing to be optimistic about the development of the 2018 Annuity Wire business, it is recommended to pay attention to the company's new business. According to research on the King Kong wire industry chain, we believe that in 2018, there will be a phenomenon of market concentration in the gold wire industry, and that Tony Electronics, as the domestic leader of King Kong wire, will benefit first from this. Continued optimism that the rapid growth of the King Kong wire business throughout the year will bring upward elasticity to the company's performance. Furthermore, in the face of the rapid growth of the company's new business, wireless coils and batteries in 2017, it is recommended to focus on the new developments in market development of the new business in 2018. The smooth development of the market will greatly increase the upward slope of the company's performance curve.
Maintain the “Highly Recommended” rating: The company's revenue for 2018-2020 is estimated to be 14.10/18.41/2253 billion yuan, net profit of 3.50/476/585 million yuan, and corresponding EPS of 3.44/4.66/5.73 yuan respectively, maintaining the “Highly Recommended” rating.
Catalysts: The expansion of diamond wire production capacity is accelerating; wireless sensor coils are entering the world's major mobile phone supply chains; the development of ultrafine metal wires and battery poles is accelerating.
Risk warning: Competition in the diamond wire industry is intensifying; demand for diamond wire is progressing lower than expected, etc.