Huanxu Electronics (601231) Comments: One-off expenses affect profit growth, miniaturization technology drives profitability

Huanxu Electronics (601231) Comments: One-off expenses affect profit growth, miniaturization technology drives profitability

Event: The company released a report on 2019 results and achieved operating income of 372.

4.0 billion (+ 10% year-on-year.

89%), achieving net profit of return to mother 12.

6.2 billion (+6 year-on-year.


The product structure affects the gross profit margin, and the period expenses drag down the net profit: the company’s operating income in 2019 is 372.

4.0 billion (+ 10% year-on-year.

89%), achieving net profit of return to mother 12.

6.2 billion (+6 year-on-year.

98%), deducting non-attributed net profit of 10.

4.5 billion (YoY-12.

52%), gross profit margin 9.

96%, a decrease of 0 every year.

9 averages.

In terms of product revenue, in 2019, the revenue of communications and consumer electronics products increased by more than 10%, the revenue of industrial and storage products increased by more than 30%, and the revenue of computer products decreased by about 16%, mainly due to: (1) new products for communications products and major customer orders increase; (2) sales of wearable products in consumer electronics products increase; (3) customer orders for industrial products increase; (4) new customers for storage products;5) Computer products are affected by trade frictions and reduced orders from major customers.

From the perspective of profitability, the company’s gross profit margin in 2019 has increased, mainly due to the impact of product structure, and the proportion of SiP business revenue with a reduced gross profit margin increased.

The company’s net profit after deducting non-attribution increased, mainly due to the rapid growth of expenses during the period, including management expenses.

7.8 billion (+27 compared to the same period last year).

5%), mainly due to the increase in depreciation costs caused by the application of new leases, the increase of company personnel-related costs, the one-time costs of mergers and acquisitions projects entering management costs, and other reasons.

26 ppm (10-year increase of 0.

7.4 billion), mainly due to the increase in interest expenses in 2019.

In addition, the company’s non-recurring profit and loss amount for 2019 is 2.

17 million, an increase of 2018–1,445 million, mainly due to investment income from the sale of transactional financial assets and government subsidies.

Q4 revenue was flat in the quarter, and the epidemic affected Q1 performance indicators: From the single quarter of Q4 2019, Q4 achieved revenue of 112.

3.3 billion (YoY-1.

5%), net profit attributable to mother 4.

10,000 yuan (YoY + 0%), deducting non-attributed net profit 3.

2.8 billion (YoY-25%), with a gross profit margin of 10%, followed by a decline of 1.

For 4 units, the contraction in gross profit margin has a conductive effect on the company’s deduction of non-attributed net profit.

Regarding Q1’s performance outlook, the company expects Q1’s revenue to remain flat compared to the same period last year, and its profitability will improve, possibly due to the impact of the domestic epidemic.

The impact of the epidemic on the company is mainly reflected in the continuous resumption of work, and procurement from PCB suppliers in Hubei has been affected.

It is expected that by 2020, the company’s major customers will insert and upgrade 合肥夜网 5G products and wearable products. Servers, storage and industrial products will also improve. Q3 is expected to merge the French Feixu report, which is expected to drive the company’s performance growth.

AirPods Pro introduces the SiP process, 5G is expected to bring more space for SiP: In 2019, Apple ‘s new AirPods Pro has added features such as noise reduction and increased number of parts. For the first time, SiP design was introduced in wireless headphones.

Through the SiP packaging process, AirPods Pro can reduce the size of the core system, while maintaining many advantages.

As AirPods Pro continues to sell well, the company is expected to enter AirPods Pro’s SiP module supplier this year.

In terms of 5G, 5G has increased due to the need for compatible expansion, and the number of mobile phone RF front-end components will greatly increase, driving the demand for SiP.

In addition, 5G millimeter-wave compatible mobile phones will need AiP modules, which are of great value.

The volume of 5G mobile phones in 2019 is 19 million, and it is expected that the volume of 5G mobile phones will reach 200 million by 2020. Millimeter-wave-enabled mobile phones will also begin to be replaced in North America, Europe, Japan and South Korea.The company is a leading manufacturer of SiP modules. Familiar with SiP modules for wireless communication will help to benefit from the added space brought by 5G.

Maintain “Recommended” rating: optimistic about the company’s industrial chain level of upside, technological advantages continue to expand in new application areas, the recovery of Apple’s industrial chain drives the company’s performance growth, and predicts the company’s net profit attributable to its parent from 2019 to 2021.

6.3 billion, 16.

7.7 billion and 20.

81 trillion, EPS is 0.

58 yuan, 0.

77 yuan, 0.

96 yuan, the corresponding PE is 32.

97X, 24.

82X, 20.


Risk reminder: iPhone, iWatch launch volume is less than expected, server market demand is less than expected, raw material cost rises more than expected, and trade frictions intensify.