Key elements of the report
Incident: On the evening of January 20, the company issued an announcement. In order to increase the investment and layout of resources in the urban smart sector, the company plans to establish a wholly-owned subsidiary, Radio and Television Digital Economy Investment and Operation Co., Ltd. (“Radio and Television Digital Investment” for short), with a registered capital of 1 billion yuan.
Key points of investment:
Increase investment in urban intelligence business resources and clarify the two-wheel drive strategy: Urban intelligence is an important business scenario for the implementation of the company's AI+ strategy. The establishment of a special radio, television, and digital investment has once again clarified the company's strategic vision of fintech and urban intelligence dual-wheel drive. The company's urban intelligence business comprehensively covers application scenarios such as intelligent transportation, intelligent security, intelligent government, intelligent education, smart retail, etc., to achieve refined and intelligent management of urban data and information, and has created a series of benchmark projects. As the company invests more resources from the urban intelligence sector, this business is expected to become a new engine for the company's development.
Urban intelligence and fintech are integrated and take off from the digital economy: the company comprehensively and deeply builds digital economy business. In terms of digital government, the company collaborates with relevant government agencies, enterprises and institutions to expand comprehensive urban services such as urban brain, smart parking, and smart policing to help the government improve comprehensive urban management capabilities and service levels. In the digital yuan field, the company has the ability to build a full digital yuan link, and has a layout in smart digital currency machines, digital currency system platforms, and digital currency scenario operations. The radio, television and digital investment established this time will serve as the company's investment and operation platform to carry out investment, construction and subsequent operation of digital economy business throughout the country, which will help the company seize the development opportunities of the digital economy during the “14th Five-Year Plan” period and comprehensively expand the business landscape of fintech and urban intelligence.
Profit forecast and investment advice: The company's revenue for 21-23 is estimated to be 72.28/81.00/9.088 billion yuan respectively, net profit is 839/10.13/1,206 million yuan respectively, and EPS is 0.34/0.41/0.49 yuan respectively. Corresponding to the closing price of PE on January 20, 2022, PE is 37.19/30.83/25.87 times, respectively, maintaining the “increase in holdings” rating.
Risk factors: demand for smart financial equipment and smart network construction fell short of expectations; implementation of digital yuan applications fell short of expectations; level of technology research and development fell short of expectations; overseas business fell short of expectations; uncertain risk of the epidemic.