Event: on March 11, 2019, the company released its 2018 annual report that the company achieved an operating income of 805 million yuan in 2018, an increase of 2.27% over the same period last year, a net profit of 21 million yuan, an increase of 112.21% over the same period last year, and a net profit of-20 million yuan, an increase of 88.94%. At the same time, the company issued first-quarter performance guidelines and is expected to achieve a net profit of 0-3 million yuan belonging to shareholders of listed companies.

Comments: continue to recommend the company, the company achieved a net profit of 21 million yuan in 2018, compared with 2017 to achieve a turnround. The company attaches great importance to R & D and innovation, and has a large investment of R & D funds every year. In 2018, the company invested 63.2216 million yuan in R & D, accounting for 7.86% of the business income. The company's high R & D investment will ensure the global market competitiveness of the company's leading products and increase its market share. Thanks to the company's sustained high R & D investment and early accumulation, the company has established long-term strategic cooperation with many international well-known customers such as Harman, Amazon.Com Inc and domestic well-known customers such as Huawei, XIAOMI and Geely. The company issued performance guidelines for the first quarter, which is expected to achieve a net profit of 0-3 million yuan belonging to shareholders of listed companies, an increase of 100% Murray 120.69% over the same period last year, turning losses into profits, and the company's performance inflection point appears. Continue to recommend the company!

The acquisition of ten thousand demon acoustics to achieve the integration of the upstream and downstream of the industrial chain. In 2018, the company plans to acquire 100% stake in Wanmao Acoustics by way of non-public offering of shares to all shareholders of Wanmao Acoustics. The absorption and merger of ten thousand magic acoustics will significantly enhance the company's profitability. The net profit of ten thousand demon acoustics in 2015-2017 and January-October 2018 is 3401.6 million RMB 2598.73 pounds 369721 pounds 30.1871 million yuan. At the same time, the merger of the company and Wanmao Acoustics will achieve business coordination, and the company and Wanmao Acoustics are in the upper and lower reaches of the industrial chain. after the completion of this transaction, all assets of Marvel Acoustics will be placed into listed companies. Its brand, R & D and design advantages in the field of intelligent acoustics will be effectively integrated with the original business of listed companies, and further give play to the synergy between the two sides in business, so as to enhance the profitability of listed companies.

Ten thousand magic brand leading in China, master a large number of high-quality sales channels. The company intends to acquire the main headphone brands and speakers, and ODM design and research of headphones and speakers for well-known customers at home and abroad. The downstream customers of ODM business are named customers such as XIAOMI, Huawei (indirect customers), iQIYI, Inc., Asustek, Kuwo, Gudong, NetEase, Inc and so on. Wanmao has a leading brand influence and a huge and high-quality global sales system, covering 26 provinces in China and Hong Kong, Macao and Taiwan, more than 40 Hi-Fi audio agents, 3 authorized chain systems of Apple Inc, more than 3000 offline experience stores, and 25 countries and regions such as North America, Europe and Southeast Asia.

Investment suggestion: the profit forecast for the company from 2019 to 2021 is RMB 0.88 billion, and the EPS is RMB 0.22 and 0.29 respectively. At the same time, according to the performance commitment, Wan Mou expects the net profit for 19-20 years to be 15.1 billion yuan respectively, and the performance growth will maintain a high growth rate. If you merge the table for 19 years, the company's combined net profit in 19-20 years is 230 million yuan and 324 million yuan. Maintain the "buy" rating risk hints: the acquisition of Vivian Acoustics failed, the downstream demand was lower than expected, the R & D progress was not as expected, the "chemical" adverse reaction after the merger of Wanmao Acoustics, the risk of declining profitability of acoustic components, and the progress of new acoustics products was not as expected.