Huagong Technology (000988) Company News: Performance forecast slightly exceeds expectations

桑拿

Huagong Technology (000988) Company News: Performance forecast slightly exceeds expectations

The first three quarters of performance have maintained rapid growth, slightly exceeding market expectations. The company expects to achieve net profit in the first three quarters.

50-4.

75 ppm, an annual growth of 75% -85%, of which net profit is expected to be achieved in the third and third quarters1.

19-1.

44 ppm, a year-on-year increase of 57% -90%, slightly exceeding the market and our expectations.

The company’s rapid growth in performance is due to the gains from changes in the fair value of financial assets and the significant improvement in profitability of the optical communications and laser equipment business.

The demand for massive optical modules brought by 5G will benefit the company for the long-term to meet the application scenarios of 5G. It needs larger transmission capacity and converted transmission rate support, and the optical device modules need to be upgraded accordingly, which brings demand for massive optical devices.

The company has always occupied an important position in the field of pre-transmission optical modules in the telecommunications market. It is a Huawei gold supplier. It has ranked first in the 4G optical module market in the 4G era. It is also the first company in China to receive orders for Huawei 5G optical modules.

We expect the future transformation to be a constructive and continuous advancement of 5G, and front pass optical module products are expected to become the company’s new growth point.

The laser market has a bright future, and the company has a well-established layout. It is expected that China’s laser industry will start late, but through the rapid development of China’s equipment manufacturing industry, China’s laser industry has developed rapidly.

In 2018, the size of China’s laser equipment market exceeded 60 billion yuan, with an annual growth rate of more than 20%.

The company’s products are complete, covering laser cutting systems, laser welding systems, and laser marking equipment.

With the advent of 5G mobile phone replacement, the company’s demand for laser equipment is expected to enter a new cycle of prosperity; and the company’s continuous breakthroughs in high power, inverters and overseas will continue to promote a steady rise in gross profit margin, and are optimistic about the company’s subsequent performance.Free up space.

We are optimistic about the company’s development in the field of optical devices 佛山桑拿网 and laser equipment, and maintain a “buy” rating. We are optimistic about the company’s leading position in the field of front-end optical modules in 5G networks, and an important part in the progress of domestic substitution of laser equipment.

It is expected that the company’s operating income for 2019-2021 will be 53.

48/65.

54/78.

7.2 billion yuan, net profit attributable to mothers was 5.

53/6.

51/7.

58 ppm, the annual growth rate is 95% / 18% / 17% (the faster growth rate in 19 was due to the transfer of income from changes in the fair value of trading financial assets), the current dynamic PE is 36/30/26 times, maintaining”Buy” rating.

Risk reminders: the downturn in the global auto market and the risk of increased competition in the industry; the risks of Sino-US trade frictions on upstream chip 佛山桑拿网 procurement; the macroeconomic downturn, and the risks of 5G construction investment falling short of expectations.