Changdian Technology (600584): Performance Forecast Turns Losses and Expects 20 Years of Profit Reversal

Changdian Technology (600584): Performance Forecast Turns Losses and Expects 20 Years of Profit Reversal
Brief evaluation of performance The company’s estimated net profit attributable to mothers in 2019 is 82 million to 98 million yuan, of which the net profit attributable to mothers after replacing non-recurring gains and losses is -7.600 million to -9.2 trillion, the forecast is in line with expectations.In the same period of 2018, net profit attributable to mothers was -9.400 million, of which net profit after deducting non-attribution is -13.200000000. Investment logic Investment income promotes the company to successfully reverse its losses: It is expected that the company’s net profit attributable to its parent in Q4 will be 2.63 ppm-2.7.9 billion yuan, of which net profit after deduction to non-mother is -3.800 million to -5.400000000.The company’s non-recurring income in 2019 is 8.5 ppm-10.100 million US dollars, in which the subsidiary Xingke Jinpeng invested in intangible assets of Changdian Integrated Circuits (Shaoxing) Co., Ltd. in the investment income in Q4.700 million, is the first increase in non-recurring benefits.We expect the impairment of goodwill and fair value changes due to the compensation for Taiwan Starco ‘s minimum purchase commitments are the important reasons for the negative non-net profit deduction in the fourth quarter. Strengthen the headquarters and be optimistic about the gradual integration of Xingke Jinpeng: According to the company’s announcement, it is planned to set up a wholly-owned subsidiary in Shanghai to transfer core functions of the headquarters such as finance, sales, research and development to Shanghai.We believe that after the semi-annual adjustment in the second 杭州夜网论坛 half of 2019, the company is accelerating the integration of Xingke Jinpeng.The scale of the Shanghai subsidiary’s headquarters covers the domestic branches of Changdian Technology and Xingke Jinpeng’s domestic and foreign institutions. Through the strengthening of the headquarters layout, the integration measures will be implemented more effectively. We expect Xingke Jinpeng to reduce losses in 2020. In view of the expansion of the key customers in the display industry, the packaging and testing leader is expected to benefit significantly: the company plans to invest in 202014.3 ppm to expand production capacity for key customers.We believe that the packaging and testing industry is expected to maintain a high boom in 2020, driven by downstream demand such as 5G, servers and storage.In terms of large customers, we believe that the company’s Korean plant is expected to benefit from customer AiP-SiP and UWB demand, and domestic is expected to benefit from the transfer of Hisilicon orders to China. Investment suggestion The company ‘s progress towards the “big headquarters” is slightly higher than expected, and it will benefit from the industry ‘s high business climate and Xingke Jinpeng ‘s loss reduction. We raise our forecast for 2019-2021 to return to its net profit to 87 million (maintained).200 million (+ 27%) and 9.700 million (+ 18%), raise target price to 31 yuan, maintain “Buy” rating. Risk reminders: Sino-US trade friction; industry capacity expansion is too fast; Xingke Jinpeng integration is less than expected; TSMC / Intel develops advanced packaging