Pengding Holdings (002938): Withdrawal of impairment affects short-term profits but is conducive to improving long-term profit

Pengding Holdings (002938): Withdrawal of impairment affects short-term profits but is conducive to improving long-term profit
The company announced on the 28th that 西安耍耍网 the wholly-owned subsidiary Hongqunsheng Precision Electronics (Yingkou) Co., Ltd. provided a provision for asset impairment of 211.1 million yuan. After this withdrawal, Hongqunsheng’s remaining book 武汉夜生活网 assets were 114.92 million yuan, including equipment and inventoryIt will be transferred to Huai’an and Qinhuangdao factories for use, and land and buildings will be further sold.  Although the closure of the Yingkou factory and accrual of impairment may affect short-term profits, it is beneficial to long-term profits.The company’s labor union announced that at the end of November 2019, the production and operation activities of the subsidiary Hongqusheng of Yingkou had been suspended, and employees had been resettled and dismissed.Hongqunsheng’s location is far from the electronics industry, so it cannot obtain high efficiency. The industry supporting the indicators is difficult to provide customers with alternative products and services. The report data shows that Hongqunsheng’s 2016-2019Q3 net profit-0.52 / -1 / -1.2 / -0.5.7 billion, in a state of continued paralysis.We believe that although suspension of operations and accrual of impairment will affect 19 years of profitability, it will help to further optimize resource allocation, improve the company’s overall asset management efficiency and mid- and long-term operating efficiency, and will also bring a direct positive contribution to profit in the coming year;The erratic release of the release rhythm affected the performance in November, and is expected to return to growth in December.The company’s November revenue was shortened to the lowest because the iPhone XR, which has 18 years of higher sales, was postponed for one month, and the peak of cargo pulling was postponed to October-November. The high base in November caused the upstream TSMC to have built-in chips.Insufficient capacity also has an impact. According to our industry chain research and understanding, since Q3, 5G mobile high-end AP chips have driven TSMC’s 7-nanometer production capacity to full load. At present, OEMs of 5G-related chips such as OLED driver ICs, TDDI chips, CMOS sensors, and fingerprint identification chips are foundry.Demand has also begun to warm up. TSMC’s wafer foundry delivery time has been extended to more than 3 months. The tight supply situation will continue into next year, which will bring some pressure to downstream terminals.At this point in time, due to the iPhone 11 being better than pessimistic, the new iPhone SE2 will enter the pre-stocking phase in the first half of next year. Apple’s wearable business continues to be booming. Domestic brand customers’ 5G mobile phones are accelerating the release. 5G smart terminal motherboard upgrades are driving overall HDI demand, Peng Ding’s revenue growth in December is expected to return to growth, and the growth trend in Q1 is good.  At present, 20 years of Apple’s FPC & SLP supply chain trends are upward: 1) iPhone 11 series sales are more conservative than expected, supply chain inventory in the first half of 20 years, reducing the pressure on component prices; 2) 2020H1 will be driven by the release of new iPhone SE2Low season demand, and the Q1 industry chain in 2019 is in a destocking base. It is expected that the company’s product structure and productivity change will improve in 2020H1. By 2020H2, the release of Apple’s 5G mobile phones will further expand pricing, and increase wearable equipment and software applications.The tight supporting properties are expected to further stimulate the demand boom.3) Currently in the new product supply chain verification period next year, based on the scale and supporting advantages of its counterparts in Japan and Taiwan, the company’s potential supplementary material numbers and sharing deserve continuous attention.4) In terms of SLP, the 20-year iPhone series will be equipped with SLP, and the 5G version of SLP will have improved area and integration, replacing the company ‘s new production capacity in Qinhuangdao.  Apple system’s internal and external expansion category supplements complement internal automation innovation, and long-term momentum is still expected.The company’s main business logic is the expansion of the material number categories of mobile phones, headphones, tablets and other soft boards within the Apple system, as well as the gradual fading out of Japanese FPC giants, and the gradual expansion of its own expansion.  In addition, the company ‘s SLP business ‘s precise HDI advance technology route, and the miniLED high-end HDI market are expected to be laid out. Subsequently, the high-speed HDI and SLP markets in the era of integration are expected to open.In addition to the business level, the company is also committed to self-innovation within the enterprise. For example, it leads the industry trend in the automation layout. The number of internal grass-roots manual employees has a long-term reduction plan. The transition from a triangular employee structure to a trapezoidal structure will increase the number of equipment management engineers.In the long term, it is expected to further comply with artificial dependence.  Maintain “Highly Recommended-A” investment rating.Taking into account the closure of the Yingkou subsidiary, the impact of impairment on the revenue and profit in 19 years (expected to reduce approximately 100 million revenue and 200 million net profit in 19 years), and the contribution of this part to the performance of the next year(The annual advanced pre-increasing approximately 1 million net profit in the next year), and taking into account the latest business trends of the company, we update the profit forecast. It is estimated that the company’s revenue for the year 19-21 will be 267/327/372 billion and the net profit attributable to the parent will be 28.3/37.7/44.300 million, corresponding to EPS 1.23/1.63/1.92 yuan, corresponding to the current total PE is 36/27/23 times.There is still room for the company’s future earnings to exceed expectations. Maintain the “Strongly Recommended-A” rating with a target price of 56 yuan. Risk warning: major customer innovation is lower than expected, 5G gradually exceeds expectations, and automation reform is expected.