Xingsen Technology steps on the road of rapid growth
The non-public additional issuance of Xingsen Technology is actually a disguised equity incentive. The company announced that it planned to raise 400 million yuan through private placement at a price of 16.42 yuan/share, half of which would be subscribed by the company's core middle and senior management team, and half by strategic investors; The sales restriction period is 36 months. We believe that this additional issuance is actually a disguised equity incentive with a locking period of 3 years, which further reflects that this incentive is a way of "gathering people and doing practical things" when the company steps on the strategic turning point, and will escort the long-term growth of the company.
Strategy 1: Traditional PCB services in combination with 4G base station equipment construction are expected to usher in a rapid turnaround. Yixing Plant of the Company started to ramp up its production capacity last year, with an estimated loss of more than 30 million yuan; It is expected that the year-end will be close to the break even point. The base station equipment takes the lead in 4G investment, and the first batch of layout is expected to be completed before the second half of the year; A large number of high-rise boards will enable the company to rapidly increase its new capacity. Huawei, Fenghuo, ZTE and other communication equipment manufacturers are core customers of the company. In the future, the company will achieve a process of volume increase - profitability - product optimization - profitability improvement - high flexibility.
Strategy 2: The military products business is expected to welcome explosive growth to meet the general trend of national defense and security. We believe that 2014 will be the first year of national defense and security, and the number of military products will increase significantly in the future, increasing the demand for model products. The company has set up a military product business department, which has been recognized and supplied by major customers. Product quality and delivery time are the key to win in this high margin field, and it is expected to achieve rapid growth.
Strategy 3: Guarantee of IC carrier plate growth in the next five years. IC carrier plate is the most critical material for semiconductor packaging, which is basically imported at home, with an annual demand of about 4 billion dollars; It is also expected to be an important support area for chip localization. At present, the company has gradually introduced formal batch production orders, and is expected to achieve a breakthrough in mass production within the year. We estimate that the current single carrier plate production line is expected to achieve a profit of nearly 100 million; In the future, the company will focus on this field and is expected to expand production depending on the progress of commissioning.
The future strategic planning is sufficient to support the long-term and rapid development. It is estimated that the revenue from 2013 to 2015 will be 1.27 billion, 1.72 billion and 2.6 billion, and the net profit will be 120 million, 190 million and 320 million, with earnings per share of 0.52, 0.85 and 1.43 yuan respectively. 30 times the 2014 P/E ratio and a target price of 25.5 yuan.