Goodix Technology (603160) 2018 Annual Report and 2019 1 Quarterly Report Review: Under-Screen Optical Leader Firms 2018 and 2019 Q1 Results Larger Than Expected

Goodix Technology (603160) 2018 Annual Report and 2019 1 Quarterly Report Review: Under-Screen Optical Leader Firms 2018 and 2019 Q1 Results Larger Than Expected

Core view The company is based on traditional capacitors, touch chips, and accelerates the application of fingerprint optical solutions under the screen. At the same time, it is looking forward to the layout of 3Dsensing and NB-IoT, and the growth path is clear.

The penetration of under-screen fingerprints is accelerating in 2019, and it is optimistic that the number of implanted mobile phones with under-screen fingerprint chips will reach 1.

With 500 million units, the company, as a leading manufacturer, has benefited greatly from its progress, and its revenue and profits will continue to improve.

The 2018 and Q1 2019 results exceeded expectations.

The company achieved revenue of 37 in 2018.

2.1 billion (+1.

08%), net profit attributable to mother 7.

4.2 billion (-16.

29%), exceeding the expected growth, mainly due to the report and the increase in the proportion of fingerprint chip sales under the optical screen, driving the revenue of fingerprint recognition chips to 30.

8.3 billion (+ 5%), revenue accounted for 83% (+ 3pcts).

In addition, the company’s 2018Q4 / 2019Q1 respectively achieved revenue13.

56/12.

2.5 billion, +39% /-10% MoM respectively, achieving net profit attributable to mothers4.

24/4.

14 ppm, +105% /-2% month-on-month. The first quarter of 2019’s performance grew faster than expected. We believe that the company’s leading position in the fingerprint industry under the optical screen is stable.

In the first quarter of 2019, HOVM flagship models P30, Reno, X27, and Xiaomi Mi 9 will soon be available exclusively for the company. Looking forward to the second quarter of 2019, domestic OVMs (Oppo, Vivo and Xiaomi) are expected to be launched in the high-end (similar to Find, NEX)As a core manufacturer, the company will actively benefit in 2019.

Continued high investment in research and development, and the fingerprints under the screen will increase the gross profit margin.

The company’s sales + management expense rate is + 3pcts per year, which is mainly due to the increase in company product promotion, share payment expenses and consulting service fees in 2018.

R & D costs amount to 8.

400 million (+ 41%), the expense ratio increased to 22.

5% (+6.

3pcts), in addition to single-point + wide-area screen fingerprint chips, the company also increased research and development and pre-research investment in cameras, Bluetooth and NB-IoT IoT chips, 3D sensing and automotive applications.

In 2018, the company added 144 new patents, and 75 items increased significantly from one year to 2016.

In terms of gross profit margin, due to the good competition in the industry, the company’s chips and recognition algorithms are leading, the unit price of fingerprint chips under optical screen is stable, the gross profit rate is good, and the price gradually exceeds market expectations.Capacitive fingerprint chip is about US $ 1). The gross profit margin in Q1 2018 / Q1 2019 reached 65% / 61%, which is a significant improvement from 52% in Q3.

Equity incentives will be conducted for two consecutive years to restrict core technical personnel to help 都市夜网 the company’s development.

The company’s 2018 equity incentive plan covers 300 senior and middle-level technical personnel, and plans to grant 10 million copies at an exercise price of 84.

22 yuan, lock-in period 1.

5 years.

This incentive plan is intended to cover 128 middle-level and core technical personnel, and it is planned to grant 2.34 million shares of stock investment (exercise price of 105).

33 yuan, lock-up period of one year), 800,000 shares of extension stock (grant price of 52.

67 yuan, one year lock-up period).

The company intensively launched stock budgets and budget stock incentive plans to restrict the interests of core personnel and help the company’s sustainable development.

Based on biometrics, lay out a broad IoT chip market.

While consolidating the biometrics market, the company is 南宁桑拿 actively deploying Bluetooth chips, NB-IoT chips and 3Dsensing, and is committed to building a “sensor + MCU + security + connectivity” integrated platform in the IoT field., BLE wireless connection chip, security MCU + biometric fingerprint sensor and other products.

The new product is expected to be the first to land in the field of Bluetooth audio, and is expected to bring incremental revenue in the second half of the year.

In 3Dsensing, the company has existing samples of structured light solutions, and ToF is accelerating. It is expected that mass production products will also land in the second half of the year.

Risk factors: New technology application is less than expected; customer development is less than expected; unit price and gross profit margin of the product decline.

Investment suggestion: The company is based on traditional capacitors, touch chips, accelerating the application of fingerprint optical solutions under the screen, and it is looking forward to the layout of 3Dsing and NB-IoT.The penetration of under-screen fingerprints is accelerating in 2019, and the number of mobile phones equipped with under-screen fingerprint chips in the entire market is expected to reach 1.

500 million units, the company’s leading level is significant.

We raise the company’s EPS forecast for 2019/20 to 2.

97/3.

55 yuan (previous forecast was 2).

41/2.

68 yuan) and predicts an EPS of 4 in 2021.

33 yuan, taking into account the leading premium of 70% of the listed share, giving 45 times PE in 2019, the corresponding target price is 133.

44 yuan, maintain “Buy” rating.