1. Overview of events
The company's wholly-owned grandson has signed a service contract with the public security department of the Brazilian state of BAHIA (on behalf of the Bahia state government) for a dedicated communications and command and dispatching platform, with a total project value of about US $39.4959 million (about RMB 252 million). 2. Comments: the company's overseas orders have increased significantly, and overseas market orders have continued to improve. The number of major contracts announced by the company in 2020 is only 3, and all of them are in the second half of 2020. By October 24, 2021, eight major contracts have been announced one after another (including Shenzhen Metro, Brazilian Federal Road Police, a Central Asian industry partner, Spain Telecom, Shenzhen Nanshan District Government, Brazil's State of Bahia (BAHIA), etc.). Compared with the same period last year, orders improved significantly compared with the same period last year, especially in overseas markets, the company's orders continued to recover, indicating that the impact of patent incidents on the company's overseas business has gradually decreased, and overseas market orders are expected to continue to improve. 3. The company has made a turnround in its operating performance for two consecutive quarters, and its profit situation has greatly improved. The company announced in the third quarter on October 15 that its business has gradually recovered due to the relief of the overseas epidemic. The net profit of the Q3 company alone is 2.2423 million yuan to 32.2423 million yuan, which is a big improvement from the loss of 53.198 million yuan in the third quarter of last year.
In the first and second quarters of 2021, the company's net profit was-149 million yuan and 27.1226 million yuan respectively. In the second half of the year, new orders signed by the company increased significantly compared with last year, but project delivery was affected by factors such as tight supply of upstream electronic materials. Revenue increased slightly in the third quarter compared with the same period last year. The highest net profit in the third quarter is expected to be 32.24 million sustained profit.
4. Judging from the company's announced orders, the company's Q4 performance is expected to continue to reverse: the third and fourth quarters of 2020 and the first quarter of this year continue to lose money, from the 2021Q2-Q3 performance continues to reverse losses, the company is expected to bottom out, year-on-year comparison will continue to improve.
5. Investment suggestions
Optimistic about the company's leading position in the private network, with the overseas epidemic relief, the company's business is expected to continue to recover, domestic rail transit, 5G, public security network and other demand is also expected to promote the company's fundamentals to improve. To maintain the profit forecast, the revenue for 21-23 is expected to be 70.5Universe 8151,946 million yuan, and the earnings per share are 0.22max 0.27max 0.32 yuan, respectively, corresponding to the closing price of 5.39yuan per share on October 22nd, 2021, the PE is 24.6x20.3xxt, respectively, taking into account the company's industry position and the expected profitability improvement in the next 1-2 years, maintain the "overweight" rating. 6. The risk indicates that the overseas epidemic situation continues to repeat, the customer order is not sustainable, the Sino-US science and technology war leads to the instability of the company's supply chain, and the patent dispute with Motorola requires large compensation.