Comment on Shenzhen Zhuo Yi Technology Co., Ltd.

From June to June of 20 10, the company achieved revenue of 358 million yuan, up by 1 15.8% year-on-year. The net profit attributable to shareholders of listed companies was 30.04 million yuan, up 130% year-on-year, and the net profit after deducting non-profit was 29.33 million yuan, up 13 year-on-year.

Benefiting from the strategy of Huawei and ZTE to accelerate the development of communication terminal products: In recent years, the rise of Huawei and ZTE mainly depends on the rapid growth of local equipment and has entered the middle stage of development. From what we have learned, Huawei and other companies are accelerating the development of communication terminal products, and Huawei and ZTE have become the main suppliers of IPTV set-top boxes.

We predict that the next 3-5 years will be a period of rapid growth of communication terminal products. As a professional service provider of communication terminal product ODM, the company will significantly benefit from this rapid development period.

Benefiting from the convergence of 3G and triple play: the company's ADSL products account for about 30% of Huawei's, but the revenue of this part of the company's business of 350 million only accounts for 1.2% of Huawei's terminal company's revenue of about 30 billion. We believe that in addition to the rapid growth of ADSL products with downstream customers, a variety of communication terminal products are expected to become the company's performance growth point in the next two years. EPON terminal products have been supplied in small quantities. With the advancement of 3G triple play, the company's new product shipments may explode. Taking IPTV set-top boxes as an example, the company's IPTV set-top box shipments are about 654.38+10,000 units/month, and we estimate that the monthly income of this business is more than 30 million yuan. After expansion, the company may speed up the supply of such new products. The main reason for the sharp increase in performance is the increasingly stable relationship between the company and major customers, and the purchase volume of network communication terminal products of customers such as Huawei and ZTE has increased significantly. According to the semi-annual report of 20 10, the company sold 583 10 sets of various network terminal products from October to June, with a year-on-year increase of 965438.

The structure of consumer electronic products has changed, which shows that the increment does not increase income and the gross profit margin remains stable. In the first half of the year, the shipment volume of consumer electronic products was10.33 million units, up by 1 14.48% year-on-year, but the sales volume was basically the same as that of the same period in 2009. We noticed that the company's overseas business fell sharply in the first half of the year, because most of these orders were speaker products. We speculate that the high-priced speaker products have shrunk dramatically, and the rapid increase of other low-priced electronic products from China has led to the above situation. Songgang new factory will be put into use in August, and the new factory will be equipped with 16 SMT production line. After put into use, the company's production line will increase from 15 to 3 1, and the production capacity will be greatly expanded.

In the next 2-3 years, the orders of major customers will continue to maintain a high growth rate, and the company will have no worries about short-term growth. In the long run, the company will focus on network communication terminals and portable consumer electronics, and share the rapid growth of the mobile Internet era through ODM+EMS mode.

We noticed that the company focused on handheld multimedia mobile terminals and 3C converged products (see 20 10 semi-annual report P 10). Considering the company's design and manufacturing capabilities in network and consumer electronic equipment, we believe that the company's competitiveness will be further developed in the future.

The company's interim profit distribution plan for 20 10 is to distribute a cash dividend of 5 yuan (including tax) for every 10 share, with a total cash dividend of 50 million yuan.