Main points of investment:
Company announcement: according to the 2020 annual report, the revenue in 2020 was 1.564 billion yuan, an increase of 6.19% over the same period last year, and the net profit was 142 million yuan, down 17.17% from the same period last year. The net profit after deducting non-return was 116 million yuan, down 30.15% from the same period last year. Of this total, 20Q4 realized revenue of 450 million yuan, an increase of 1.64% over the same period last year, a decline of 11.05% from the previous month, and a net profit of 54.93 million yuan, down 20.19% from the same period last year, an increase of 8.75%. The performance is in line with expectations.
Due to the epidemic and some order delays in the past 20 years, profitability has declined and is expected to recover gradually in 2021. Affected by the epidemic in the first half of the year, some orders were delayed, and the company actively cooperated with customer R & D and mass production arrangements to promote the conversion of some projects to production in the second half of the year to maintain market share. At the same time, the business volume of heat dissipation and transmission plates also increased, and security income increased slightly compared with the same period last year. The price competition of traditional products is fierce, and the gross profit margin has declined. in 2020, the gross profit margin of the company's smartphone products was 30.67%, down 7.5 pct from the same period last year, and that of wearable devices was 11.87%, down 17.49 pct from the same period last year. As a result, the company's comprehensive gross profit margin fell 8 pct compared with the same period last year, reaching 29.8%, and profitability declined significantly.
The R & D expenditure rate (9.5%) remains at a high level, the company continues to attach importance to R & D, and does not reduce R & D expenditure due to the negative impact of the external environment. 2020 is the critical period for the company's research and development, a number of key R & D projects such as folding screen mobile phone hinge project and wearable watch case project have entered the intensive development stage, and some products have been recognized by customers and related certifications. some projects have entered the stage of mass production. We expect gross margins to pick up and increase profitability as some of the 21-year R & D projects enter the stage of mass production.
Convertible bonds raise funds in place, continue to expand production capacity, and maintain the company's leading position in the MIM field. According to the company's announcement, the project plans to purchase 12 continuous furnaces with a planned production capacity of 627 million pieces of MIM products, including 600 million pieces of MIM for smartphones and 27 million pieces of MIM for wearable devices. By the end of 2020, 37% of the money has been invested. We expect the follow-up to enter the equipment procurement stage and speed up the construction of the project. According to the company's forecast data, the project will be postpartum. It is expected to increase the income by 1.025 billion yuan. MIM products extend to wearable devices, smartwatches, TWS headphones and other products, help to enhance the company's product ASP, is expected to further consolidate the company's leading position in the MIM field.
Continue to be optimistic about the rapid growth of leading enterprises determined by the development trend of the MIM industry. After the pains caused by capacity expansion and customer switching in 2018 and 2019, the company is expected to benefit from the industry growth under the background of technology penetration in the future. Closely follow the trend of the industry to carry out forward-looking layout, the establishment of two major business departments of heat dissipation and transmission in 2019, has made a certain amount of income. From the perspective of the development of the MIM industry, with the innovation of consumer electronics products in the future, there are many new requirements for upstream enterprises, such as folding screens, lifting cameras, TWS headphones, wearable devices, etc., all of which have put forward more demand for MIM products, and the industry will usher in explosive development and increase the proportion of users in the field of consumer electronics. The profit forecast for 2021-2022 is lowered, and the 2023 forecast is added. It is estimated that the net profit for 2021-2023 will be 2.35 less than 292 million yuan (the original forecast is 288 / 411 million yuan), corresponding to PE which is twice that of 20-16-12, and the buy rating will be maintained.