Event
According to the company's report for the first quarter of 2020, Q1 realized operating income of 326 million yuan, an increase of 13.09 percent over the same period last year; net profit of shareholders belonging to listed companies was 87 million yuan, up 28.61 percent over the same period last year; and basic earnings per share was 0.22 yuan per share, up 12.27 percent over the same period last year.
Comment
Q1's profits are growing steadily and its profitability continues to improve. The company's Q1 operating income and net profit of shareholders belonging to listed companies increased by 13% and 29% respectively, with gross profit margin and net profit margin reaching 37% and 27% respectively, year-on-year changes-5pct and 14pct. The main reason for the company's increased profitability is that (1) the company focuses on consumer electronics, including multi-brand smartphones such as Samsung and Huami OV and tablets such as Apple Inc. Q1 overseas epidemic is weak, overseas business is less affected, and domestic online education, online office rise, tablet and laptop sales growth. (2) the No. 2 melting and casting production line of the company has been put into production, the self-production proportion of Q1 raw materials has been further increased, the scale advantage has been further expanded, and good economic benefits have been achieved by reducing costs and increasing efficiency.
The application trend of metallized structural parts is remarkable, and the mobile phone metal frame market is more than 100 billion. Metal structures are widely used in 5G high-end models, and high-strength aluminum alloy frame + glass or ceramic backplane has become a common configuration of flagship models. The permeability of metal frames is expected to increase rapidly from 5 per cent in 2016 to 50 per cent in 2020, becoming the mainstream application in the next 3-5 years, and the global market is expected to be about 130 billion yuan in 2020.
Laptops and tablets benefit from the "home" economy, and the consumption stock of 5G mobile phones is still there. From February to March under the epidemic, most of the domestic office, education, medical and other applications are transferred online, and the "home" economy creates new demand for tablets and computers. With the normalization of online applications in the future, laptops, tablets and other terminal devices are expected to accelerate replacement. The company's layout of overseas markets, overseas customers account for 30% of the business, stacked in the first quarter capacity utilization recovery is relatively fast, Q1 excellent performance. The demand for 5G mobile phones has been frustrated by the epidemic, but the market stock is still there, and the long-term demand has not decreased but has been delayed. With the overseas epidemic of 20H2 under control, the consumer demand for mobile phone terminals is still expected to pick up.
Profit forecast: the company's operating income from 2020 to 2022 is estimated to be 16.46,21.04 and 2.644 billion yuan respectively, and the net profit of shareholders belonging to listed companies is 3.41,4.39 and 545 million yuan respectively. EPS is 0.85,1.09,1.36 yuan per share, corresponding to PE is 29,23,18 times, continue to be given "overweight" rating.
Risk hint: customers and brands are relatively concentrated in risk, and the impact of overseas epidemic on demand.
