Yutong Technology (002831): The 5G replacement wave is expected to drive the fundamentals of 2020 to continue to repeat TOP PICK

Yutong Technology (002831): The 5G replacement wave is expected to drive the fundamentals of 2020 to continue to repeat TOP PICK
Company dynamics keep outperforming industry companies Recent company announcement The company announced plans to invest RMB 700 million in the Shanghai Jinshan Industrial Park to build Yutong high-end printing and packaging projects with its own or self-funded funds. The project company is expected to reach capacity in 2026, with an annual output after reaching capacity200 million 杭州桑拿网 high-end paper packaging gift boxes, 1.800 million color boxes and 1.500 million printed manuals and other printed materials, corresponding to an annual output value of 1 billion US dollars.  Comment 1. Looking forward to 2020, the 5G replacement wave is expected to drive the company’s fundamentals upward.As the leader in consumer electronics packaging, about 80% of the company’s revenue in 2018 came from customers in the consumer electronics industry, such as communications, computers, and smart things. In the next two years, we expect the arrival of 5G replacement and the rapid growth of demand for AIoT products, which is expected to helpThe company’s revenue from customers, consumer electronics customers such as Huawei, Xiaomi, Google, Amazon, etc. has accelerated.  2. Actively accelerate the development of a diversified 杭州桑拿 customer structure. New customers such as wine bags and cigarette labels are expected to achieve rapid volume.Relying on the R & D, products, services, and scale advantages formed in the consumer electronics industry, the company has further expanded its customers in such industries as wine bags, cigarette labels, cosmetics, food, health, and luxury goods.In the field of cigarette labeling, the results of the recent new year tenders such as China Tobacco in Yunnan have been publicly announced, and Yutong has won excellent bids. In the field of wine packaging, the company has successively opened high-quality customer orders such as old warehouses in Yangzhou, Yanghe, Maotai, and Fenjiu.Annual tobacco label, wine bag and other industries are expected to maintain rapid growth.  3. The nation’s production capacity layout is another city, and smart factories help improve efficiency.The announcement of the company ‘s investment in Shanghai of US $ 700 million to build new production capacity will help the company to further enhance its comprehensive supporting service capabilities and tap customer needs in the Yangtze River Delta region.In addition, the company is currently deploying smart factories with greater efforts. We expect that the company’s first smart factory will land by the second half of 2020, which will play a role in saving costs, improving yields and improving human efficiency.  4. Convertible bonds were approved, and capital helped the growth of domestic and foreign businesses.On January 3, 2020, the company’s US $ 14 million convertible debt was approved by the Securities Regulatory Commission. The company plans to use the raised funds for the construction of industrial bases in Yibin, Xuchang, Vietnam, and Indonesia.Prospects for domestic and international business development.  Estimates suggest that based on the rebound in downstream demand and the expansion of customers in multiple industries, we raise the company’s 19/20 profit forecast3.2% / 7.7% to 1.22/1.49 yuan, currently corresponding to 24/19 times P / E respectively.Date 21-year profit forecast.83 yuan.Maintain the outperform industry rating, re-select the best, increase the expected profit forecast and estimate conversion, raise the target price by 22% to 33 yuan, corresponding to 22/18 times 20/21 P / E, currently there may be 16% growth space.  The prices of risky raw materials fluctuated sharply, downstream demand growth fluctuated, and the RMB exchange rate fluctuated the most.