Main points of investment:
Consumption upgrading promotes the increase of silk demand. Silk products are smooth, healthy and comfortable, and they are traditional textile products in China with a long history. With the upgrading of consumption and the increase of residents' demand for healthy natural products, the domestic demand for silk will be fully opened. At the same time, with the development of Belt and Road Initiative and the strength of China's silk technology and brand, the external demand of silk products will further increase.
Golden three Pagoda brand tension, Golden Silk net established industry influence Jiaxin Silk is the only listed company in China's silk industry, with the whole silk industry chain business, will be the first to benefit from the development of C2M model. Its Golden three Pagoda brand has a full range of silk products with high added value, a gross profit margin of 60 per cent, millions of fans on platforms such as Tmall and JD.com, and currently accounts for 80 per cent of online sales. Golden Silkworm Network is the company's supply chain financial platform, in line with the long-term development trend of the industry, platform income will be further released.
With diversified development and increased performance flexibility, Landoptics, which invests in shares in the form of financial investment, has applied for the listing of the scientific and technological innovation version to the Shanghai Stock Exchange. Core Technology, which participates in the investment, has an advanced 6-inch industrial production line of MEMS chips, and its process capacity covers the whole process of MEMS chip production.
Profit forecast and investment rating: in the short term, the company's income and profit growth mainly comes from the upgrading of consumption to open the cocoon and silk market, but in the long run, the company's overseas investment in semiconductors and other businesses have strong growth potential. Taking into account the advantages of the company in the cocoon and silk industry in terms of the whole industry chain, full category, brand awareness and technology, the profit forecast for 2020 / 2021 is given. In 2022, the EPS is 0.30, 0.34, 0.42, respectively, and the corresponding PE is 20.33, 17.92, 14.68, respectively. The first coverage is given a "buy" rating.
Risk tips: raw material costs rose faster than expected; trade frictions; product promotion was lower than expected; the company's semiconductor business did not meet expectations.