First, the production capacity and site tension have been resolved
According to Dongshan Precision's previous announcement, it is planned to set up Yancheng Dongshan or Yancheng Weixin in Yancheng, Jiangsu. The total investment of the project is 3 billion yuan, covering an area of ​​about 500 mu, with a total construction area of ​​550,000 square meters. It invests in flexible circuit boards, LED packages and cover glass. And other projects. We believe that the subsidiary MFLX has the world's leading FPC production technology, and Suzhou Weixin is a wholly-owned subsidiary of the subsidiary MFLX in Suzhou. This investment will effectively solve the capacity bottleneck of Suzhou Weixin and enhance the production capacity of the company's FPC business. The LED business is an important performance growth point for the company. This expansion will provide support for the future growth of the LED business. At the same time, the company's site tensions will also be resolved.
Second, to help FPC performance volume
In 2016, the company completed the acquisition of MFLX, a leader in FPC manufacturing. MFLX's large customers are ushered in a large-scale production and sales year. With the increase in sales of its main customer A company and the increase in the value of FPC stand-alone, it is expected that the company's FPC business will usher in heavy volume. In the long run, the penetration of the company's FPC products in the field of wearable devices and new energy vehicles will open up its long-term growth potential in the future.
Third, actively promote the repayment of overseas financing
The company has recently completed the fixed fundraising event, with a fixed price increase of 20.12 yuan/share, a total raised fund of about 4.5 billion yuan, and a net fundraising of about 4.439 billion yuan. At present, the funds are being actively promoted to repay overseas financing funds. It is expected that after the completion of the corresponding foreign exchange management and banking procedures, the company's financial expenses will return to normal.
Fourth, the traditional main business ushered in a new cycle of growth
The company's original main business is precision sheet metal, precision die-casting production, mainly for base station antennas, filters and power amplifier heat sinks, and in-depth cooperation with major communication equipment manufacturers such as Huawei and Ericsson. According to the development plan of 5G, it will enter the investment construction period in 2019 and 2020. The evolution of the antenna technology of 5G communication to Massive MIMO will further increase the demand for antennas and filters. We expect that with the arrival of 5G communication, the company's traditional main business will enter a new cycle of growth.
V. Earnings forecast and investment advice
The EPS of the company is expected to be 0.62, 0.82 and 0.99 yuan in 2017-2019, and the PE corresponding to the current stock price is 39X, 30X and 25X respectively. Considering the company's leading FPC production technology and FPC application market space, the performance has a large growth flexibility, giving the company 45-50 times PE in 2017 and a reasonable valuation of 27.90-31.00 yuan in the next 6 months, maintaining a “strongly recommended†rating. .
risk warning. The 5G construction promotion failed to meet expectations; industry competition intensified; new technology innovations and applications fell short of expectations.
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