Events:
On October 26, Dewey Video (300167) released its third quarterly report: the company's total revenue in the third quarter of 2016 was 54.0143 million, down 53.04% from the same period last year, and the net profit attributed to the parent company was-14.9863 million, down 367.87% from the same period last year. In the first three quarters, the company's total operating income decreased by 9.08% compared with the same period last year, and the net profit attributed to the parent company was-28.9087 million, down 76.81% from the same period last year.
Main points of investment:
Unrecognized income contracts are more of a drag on performance, so there is no need to worry too much. The company is located in China's leading smart city integrated service provider, the world's leading manufacturer of laser display products. During the three-quarter reporting period, the number of settable projects that met the revenue recognition criteria decreased compared with the same period last year, and most of the projects were still in the process of implementation and acceptance in the third quarter, resulting in a rapid decline in revenue and net profit. At present, as of the third quarter, the total value of the company's existing project contracts has reached 460 million, of which the unconfirmed contract amount has reached 375 million, accounting for more than 80%. We believe that there is no need to worry too much about the company's orders. according to the project schedule, the revenue recognized in the fourth quarter is expected to increase and the amount of loss is expected to be reduced.
The company ploughs the field of smart cities and is expected to benefit from policy catalysis. The company has many years of technology accumulation in the smart city field, building a full range of service capabilities, covering smart city top-level planning, scheme design, construction implementation and operation management and other integrated business. At present, the business areas involved are integrated services such as data storage and transmission, as well as a variety of smart city application systems. Smart city is the inevitable choice for the development of new urbanization in China, and it has always been a sunrise industry vigorously promoted by the government. The 13th five-year Plan proposal clearly states that it will support the construction of green cities, smart cities, forest cities and intercity infrastructure connectivity.
The Ministry of Housing, the National Development and Reform Commission, the Ministry of Industry and Information Technology and other important departments have all participated in the smart city pilot planning, and a total of 686 pilot cities have been planned by 2015.
The prospect of the industry is clear, and the company's performance can be reversed in the future. The future of the industry in the smart city area of the company is clear, and the company's revenue has increased steadily in recent years, benefiting from the government's promotion of smart city projects, which increased by more than 50% in 2015. If unconfirmed contracts are considered in 2016, the company's revenue continues to grow at a high level. The company's net profit has declined in recent years, mainly due to the increase in the cost rate caused by the increase in project investment. We believe that in the context of the smart city vigorously promoted by the government, the company's orders are guaranteed, and thanks to the development of the industry and the increase in orders, the scale effect is revealed, the expense rate is expected to decline, and the company's performance can be reversed in the future.
Earnings forecast and investment rating: the company currently has a market capitalization of less than 5 billion. Benefiting from the high growth of the industry in the future, the company is expected to reverse its performance and give an overweight rating for the first time. It is estimated that the income of the company from 2016 to 2018 is 269 million yuan, 484 million yuan and 727 million yuan, the net profit is-19 million, 22 million, 40 million, and the earnings per share are-0.06,0.07,0.13 yuan. The current stock price corresponds to the PE of-253,215,120 times from 2016 to 2018.
Risk tips: 1) the promotion of smart city policy is not up to expectations; 2) the completion of the company's project contract is not up to expectations; 3) the company's ability to obtain orders is not up to expectations; 4) macroeconomic and market systemic risks.