Main points of investment

The company publishes its annual report for 2019 and quarterly report for 2020. In 2019, the company achieved revenue of 2.615 billion yuan, an increase of 97.27% over the same period last year, and a net profit of 351 million yuan, an increase of 115.90% over the same period last year, deducting 282 million of non-return net profit, an increase of 88.48% over the same period last year. In the past 20 years, Q1 Company achieved revenue of 578 million yuan, an increase of 57.59% over the same period last year, an increase of 7.21pct. the net profit reached 42.893 million yuan, an increase of 6.21% over the same period last year, deducting 40.77 million yuan of non-return net profit, an increase of 9.07% over the same period last year.

The performance reached a new high in the past 19 years, and the epidemic affected the strength of Q1 waiting for 5G. In 19 years, driven by the demand for electromagnetic shielding and heat dissipation in the field of communications and consumer electronics, major domestic customers increased the proportion of domestic supply, and the company acquired companies one after another, the company continued to expand its sales revenue every quarter compared with the same period last year. The company's 4Q19 achieved 941 million yuan in revenue, an increase of 124.41% over the same period last year, and its net profit was 91.35 million yuan, an increase of 118% over the same period last year.

The performance of 1Q20 increased slightly under the influence of the epidemic. The company's revenue in the first quarter of 20 years increased significantly compared with the same period last year, mainly contributed by the acquisition of the company last year, but due to epidemic factors, the resumption of work in the industrial chain was delayed, revenue and profit decreased compared with the previous year, while the company's fixed cost normal expenditure and increased investment in research and development had a certain impact on the company's gross profit margin and net profit margin.

Electromagnetic shielding / heat dissipation + base station antenna certification is progressing smoothly, laying the foundation for the rapid growth of 5G. The demand for heat dissipation and electromagnetic shielding has ushered in high growth in the 5G era. The certification of the company's new heat dissipation products has progressed smoothly, and progress has been made in the field of application. In terms of products, the company's products related to 5G communication base stations and 5G smartphones have begun to be delivered step by step; in terms of customers: subsidiaries Pindai, Bowei and Runxingtai have successively passed the industry leader certification qualifications, and are still in the process of customer certification; 5G base station radome, inflation plate and heat dissipation shell have obtained the supply qualifications of several major communication equipment companies; VC heat soaking plates have respectively passed the product certification of several well-known enterprises. Fans and cooling modules have obtained the supply qualification of customers, and have obtained the certification qualifications of a number of new energy vehicle manufacturers to broaden the field of application. We believe that in 1919, on the one hand, the company strengthened the product layout and enhanced strength, on the other hand, it made a breakthrough in customer certification in various application fields, which laid a solid growth foundation for the development of its electromagnetic shielding and heat dissipation products.

Domestic 5G large-scale construction acceleration + fixed increase project to enhance product strength, 20 years of the company's antenna business is expected to usher in a major breakthrough. 5G construction is an important starting point for new infrastructure. The 20-year capital investment of the three major operators has increased by 340% compared with the same period last year, with strong certainty. On the one hand, the company has started mass production and mass supply of plastic antenna vibrators in 19 years, and is expected to continue to benefit from the large-scale construction of base stations for 20 years. On the other hand, the purchasers of 5G base station antennas have changed from operators to equipment manufacturers, and antenna manufacturers with strong R & D strength will have more advantages in obtaining orders. BWT has passed the supplier qualification certification of domestic and foreign well-known communication equipment manufacturers, all in its qualified supplier list, the company is expected to achieve growth in the future 5G overall antenna supply. The company has received the fund raised by the non-public offering of A-shares on gem in 2019, totaling about 700 million yuan, mainly for the "5G communication device industrialization project". After the implementation of the project, 5G radome, antenna vibrator and high-performance structural components for switches, routers and other communication equipment will be mainly produced, which will mainly meet the construction needs of related base station antennas and communication equipment in the 5G commercial process.

We believe that the implementation of the company's fixed increase project can improve and enhance the company's product structure and enhance profitability, there are two reasons: 1) the advantages of antenna oscillator products are obvious, and 2) the structure products can form product coordination with the company's existing electromagnetic shielding and thermal conductivity products.

Investment suggestion: we estimate that the company's revenue in 2020, 2021 and 2022 is 3.759 billion, 5.043 billion and 6.458 billion respectively, the EPS is 1.26,1.80,2.28 yuan respectively, and the corresponding PE is 37.6,26.4,20.8x. The company's customer qualification certification in new areas related to electromagnetic shielding and thermal conductive materials is smooth, and the base station antenna business will usher in rapid development in the domestic 5G new infrastructure. We are optimistic about the company's development potential in the 5G market and maintain the company's "buy-B" rating.

Risk tips: the continuous development of the epidemic, the decline in sales of smartphones and 5G mobile phones, affecting the demand for upstream electromagnetic shielding and heat conduction materials and devices; the progress of 5G commercial promotion is not as expected, and the demand for electromagnetic shielding and heat conduction, upstream antennas and vibrators is lower than expected; trade between China and the United States continues to upgrade, and shipments of 5G base stations and 5G mobile phones from major customers fall short of expectations, resulting in reduced demand for the company's products. The risk that the electromagnetic shielding and heat conduction product line expansion and customer share increase is not as expected; the application of 5G base station antenna plastic vibrator is not as expected; the adoption rate of PEP process is not as expected; the industry competition intensifies and the product price drops rapidly.