Zhenhua Technology (000733) Annual Report Comments: Performance is slightly higher than expected
Event: Recently, the company released its 2018 annual report and achieved revenue of 53.
3.8 billion (-33.
43%), net profit attributable to mother 2.
5.9 billion (+27.
Core point of view The first-level discipline of revenue actively compresses inefficient businesses, and performance growth is slightly higher than expected.
In 2018, the company achieved revenue of 53.
38 ppm, the temporary reduction was mainly due to the company’s initiative to reduce the scale of the low-margin mobile phone foundry business (the business revenue decreased by 52%).
The company realized profits 2.
590,000 yuan, an increase of 27 in ten years.
17%, mainly benefited from the improvement of profitability brought about by the optimization of product structure.
Against the backdrop of high military products, the company’s core main business revenue and benefits continued to grow rapidly, the coverage of efficient products expanded, and domestic alternative varieties increased.
Improving quality and efficiency, the gross profit margin, net profit margin and ROE hit a new high in the past decade.
Absolutely, the company continues to lose weight and keep fit, focusing on advantageous industries, compressing inefficient businesses, and improving profit quality.
In 2018, the company’s gross profit margin, net profit margin and ROE indicators improved significantly, hitting a new high of ten years.
The company’s gross profit margin was 14 from 17 years.
94% increased to 25 in 18 years.
14%, mainly due to: 1) optimization of product structure, reduction in the scale of low-margin mobile phone foundries, and high-margin high-tech electronics business.
2) The transition and upgrading of high-tech military electronics, and the increase in product competitiveness have led to an increase in gross profit margin.
The company further expanded the technological innovation and R & D expansion of high-tech electronics, with 18 years of R & D expenditure.
500 million US dollars, as the basis for improving the competitiveness of competitive products.
The growth rate of endogenous performance has increased, and there is a large space for integration of high-quality chip assets in vitro.
The company is a domestic military passive inertia leader. Under the background of strong demand for information technology construction, high-tech electronic business has developed rapidly.
In addition, the company did a good job of addition and subtraction, optimized the industrial structure, significantly improved margins, and increased profit growth.
The introduction of the first budget incentive project at the end of 18 is expected to further stimulate participation and revitalize the enterprise.
In addition, the company’s major shareholder, China Zhenhua, has successively controlled or held promising stocks, and domestic chip companies with strong technical strength, including Zhenhua Scenery, Chengdu Huawei, Suzhou Shengke, and Tianjin Feiteng, have large integration space.
Financial forecasting and investment recommendations In consideration of the continuous improvement of the company’s profitability in optimizing its structure, we raised the company’s gross profit margin and adjusted the company’s EPS in 19-20 to 0.
72 yuan (the original forecast was 0.
65 yuan), and increase the 21-year forecast to 0.
With reference to the comparable company’成都桑拿网s 31 times PE in 19 years, the target price is 18.
46 yuan to maintain the “overweight” level.
Risk warning: military orders and revenue recognition are worse than expected