Crystal photoelectric quarterly review: optical coating demand, the layout of multiple areas to promote the transformation
Crystal optoelectronics releases quarterly results for 2019. The operating income and net profit of 19Q1 were RMB 489 and RMB 58 million respectively, with year-on-year growth of 32% and -0.76% respectively.
Q1 revenue returned to rapid growth, gross margin fell significantly
The expense ratio of 19Q1 was 16.75%, with a year-on-year increase of 0.33 percentage points. Management expense ratio was 12.18%, with year-on-year growth of -2.7 percentage points. The financial expense ratio was 3%, with a year-on-year increase of 1.03 percentage points. The increase of financial expense was mainly affected by the exchange rate fluctuations. The sales expense ratio was 1.57%, a year-on-year increase of -0.18 percentage points.
Gross profit margin was 18.86%, up -7.27 percentage points year-on-year and -6.43 percentage points quarter-on-quarter. The net interest rate was 11.84%, up by 4.38 percentage points year-on-year and 2.17 percentage points month-on-month. In q1, the net profit deducted from non-parent company reached RMB 46 million, a year-on-year growth of -10%.
Optical coating demand, gross margin is basically stable
Continuous penetration of multiple cameras, the demand from huawei and other domestic customers led to the rapid growth of the company's traditional optical coating business, comprehensive gross margin is also relatively stable. 3D sensing business is expected to increase Q2 growth momentum from international large customers.
Sapphire and reflective material pressure, resulting in overall gross margin decline
LED sapphire substrate business is affected by the downstream oversupply, sluggish demand, is expected to improve in the second half. Reflective materials business is affected by upstream raw material prices. This is also the main reason for Q1 overall gross margin decline.
The number of new products gradually increased, the implementation of the strategic transformation of multi-field layout
Periscope lens prism products will gradually start. The fast penetration of fingerprint under optical screen will also bring better performance contribution. DOE and holographic diffraction waveguide can be used in the fields of AR and biometrics. In 2019, the company will focus on 3D imaging, semiconductor optics, AR module and other aspects to strive for breakthroughs in technology and mass production capacity. Thin film technology with narrow band filter as a breakthrough, forming the company's key products.
The future of the company's products and technologies to extend along the transverse and longitudinal directions, promote the company from a large-scale production capacity of "product manufacturing enterprises" to provide optical solutions and core components of "technology-oriented enterprises" transformation, become the world's leading imaging, perception and new display field of optoelectronic components and solutions provider. In 2019, the company aims to achieve a 20% to 50% increase in operating revenue.
Earnings forecast and investment advice
Optimistic about the company's transformation strategy and new business, new product layout. It is predicted that the net profit of the company's parent company in 2019~2021 will be RMB 481 million, RMB 601 million and RMB 748 million respectively, with year-on-year growth
Three percent, 25 percent, 24 percent. EPS is 0.56, 0.70 and 0.87 respectively, and the corresponding p/e ratio is 24, 20 and 16X respectively. Maintain "buy" rating.
1. Risk of sharp decline in smartphone shipments; 2. Risks that the research and development progress is not as expected; 3. Risks that new applications such as AR fail to advance as expected. 4. Risk of performance failure of sapphire substrates and reflective materials.
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