Time Intercon (01729) Performance Analysis (3) – Valuation, Outlook

Valuation

Based on the expected core profit of 170 million yuan for the whole year, the current price-to-earnings ratio is only 5 times. The expected dividend yield is between 4.2 and 6.4%. This valuation is still very underestimated, even though the stock price has risen by more than 60% from the low level, but we Don’t forget that the offer price is 0.5 yuan, and the current price is still lower than the offer price!

Such small semi-new stocks are not well understood in the initial market, so the valuation will be relatively low, but with more performance announcements and continued dividends, the valuation will gradually increase. You can refer to similar examples in the past, such as Dongjiang Group (02283), Tianbao Group (01979), and Tsuen Wan Technology (01523). At the beginning of the listing, it has also fallen below the offer price. The valuation is also very low, but with one after another After the satisfactory results and continuous dividends, such small-cap stocks have gradually been recognized and accepted by investors. Valuation and stock prices have been rising. Later, the valuations have been raised from very cheap to expensive, and the changes have been very large.

In the performance, Convergence Technology has always stressed that 5G new products will start to ship, and we must know that 5G has not yet been officially licensed, but 5G will definitely be licensed, so the peak period of 5G construction has definitely not arrived. Or after the official licensing of 5G, the performance is expected to rush again, the stock price is also true! You can refer to the related concept stocks of Jingxin Communication (02342): The relationship between stock price movements and licensing:

January 2009: China officially issued 3G licenses, and the share price of Jingxin Communication was 0.5 yuan from January 2009 to 5 yuan in May 2010!

December 2013: China officially issued 4G licenses. The share price of Jingxin Communications was reduced from 1.4 yuan in December 2013 to 2.3 yuan in November 2014!

As long as the next performance shows that 5G products account for an increase in the proportion of total revenue and shipments are increasing, the market will naturally include them in 5G concept stocks, and then wait for the government to officially release 5G licenses next year or the latest.

We don’t really expect the market to speculate on the price of the sky, just give a reasonable 8-10 times price-earnings ratio, that is enough. What is the stock price when the target is valued at 8-10 times P/E? Leave it to everyone to calculate.

Outlook

1. After the completion of the acquisition of the Huizhou plant, the problem of insufficient capacity will be resolved next year, which will help to obtain more orders. In particular, orders for 5G are expected to increase significantly next year. The official licensing of 5G will bring significant benefits to the company’s business;

2. The new capacity will make it unnecessary for the company to overload production, which will help increase the gross profit margin;

3. If the Sino-US trade war reaches a settlement next year, the US orders hope to reproduce growth.