Events:

Dongfang Tong released its quarterly report for 2022 on the evening of April 25, achieving operating income of 79 million yuan, down 47.30% from the same period last year; net profit from its mother-47 million yuan, down 289.49% from the same period last year; deducting non-net profit from-50 million yuan, down 679.14% from the same period last year; basic earnings per share was-0.1025 yuan, down 287.73% from the same period last year.

Comments:

Seasonal fluctuations superimposed COVID-19 epidemic, affecting contract signing and revenue recognition in the first to fourth quarters of 2021, single-quarter revenue accounted for 17.31%, 6.82%, 21.34% and 54.53% respectively, and the seasonal fluctuation of income was more obvious. In addition, the COVID-19 epidemic rebounded in some areas in the first quarter of 2022, which greatly affected the signing of contracts and revenue recognition. The combination of the two factors led to a 47.30% year-on-year decline in revenue in the first quarter of 2022.

The chairman, director and senior executives plan to increase their holdings, showing long-term confidence. On April 25, the company announced that Mr. Huang Yongjun, the actual controller, chairman and general manager. Mr. Xu Shaopu, Director, Deputy General Manager, Chief Financial Officer and Secretary of the Board of Directors, plans to increase the company's shares with his own or self-raised funds within 6 months from May 5, with a total increase of 30 million yuan to 50 million yuan.

The plan shows the confidence of the chairman, directors and executives in the future performance of the company and the long-term investment value of the company's shares, which helps to maintain the stability of the capital market and the interests of the company's investors.

Profit forecast and rating

Taking into account the lower-than-expected results in the first quarter and the long-term confidence shown by shareholders' increased holdings, we expect 2022-24 revenue of $11.29max, net profit of 3.38 / 387 million, EPS of 0.59 and 0.74, respectively, and PE of 25x/20x/18x, respectively. Maintain the "overweight" rating.

Risk hint

1, Xinchuang's landing progress is not up to expectations; 2, the industry competition is intensified; 3, information security and emergency command business is not up to expectations, which leads to the impairment of goodwill; 4, technological change leads to the backwardness of the company's products and programs.