Event
On October 19, the company disclosed its performance forecast for the first three quarters of 2022. From January to September 2022, the company is expected to achieve a net profit of 1.61-184 million yuan, an increase of 40-60 percent over the same period last year. It is expected to realize a net profit of 1.53-176 million yuan, an increase of 42 percent and 63 percent over the same period last year.
Brief comment
The digital economy drives the market development of "one network management". The 2022 government work report clearly pointed out that the digital economy is an important starting point and direction to lead the high-quality development of China's economy. The State Council issued the "guidance on strengthening the Construction of Digital Government" to clarify the construction of digital government, promote the "one-network management" of urban operation, and improve the scientific, refined and intelligent level of urban governance. All regions of the country will speed up the construction of a "one-network" urban governance system, and the market scale is expected to accelerate.
There has been a high increase in newly signed orders and a wide range of partners. Based on more than 20 years of digital government construction experience, the company has accumulated more than 1000 customers at the county level and above. In the first nine months of 2022, the company has won large-scale orders, including Zhangdian District project (winning bid amount of 140 million yuan) and Weidu District project of Xuchang City (winning bid amount of 76.57 million yuan), etc., which is expected to become a benchmark project to promote future business development. In July 2022, the company held a partner conference to sign strategic cooperation agreements and issue joint solutions with Aliyun, Tide New Infrastructure, JD.com Technology and Xinhua to help the government build a digital economy.
Innovative business is gradually landing, combined with advanced technology is expected to achieve a higher gross profit margin. The company attaches importance to business innovation and launches "Qiji" based on digital twin technology and intelligent driving technology respectively.
Unmanned intelligence network grid car and digital twin city management platform. Up to now, the amount of urban management project based on digital twin technology has reached 430 million yuan, and CIM digital twin platform and urban space Internet products based on AR/VR technology will be released in the future, which is expected to improve the gross profit margin.
The company achieved rapid growth in the first three quarters, full orders on hand, steady expansion of new business, and is expected to achieve rapid growth for the whole year. We expect the company's net profit from 2022 to 2024 to be 2.72,3.54 and 449 million yuan respectively, with corresponding valuations of 31x, 24x and 19x, respectively, and upgrade the company's rating to "buy".
Risk tips: repeated risks of the epidemic, one network management business orders are less than expected risks, innovative business R & D and landing are less than expected risks, digital government market competition aggravates risks, ecological partner joint solutions are less effective than expected risks, and so on.