Main points of investment
The performance continued to grow at a high level, and the operating cash flow improved significantly. In the first three quarters of 2018, the company achieved operating income of 3.707 billion yuan (YoY+279.74%) and net profit of 262 million yuan (YoY+267.91%). The performance maintained a strong growth trend. The main factors driving the company's continued profitability during the reporting period were the gradual confirmation of integrated orders and the sales growth of high-precision positioning equipment. On the other hand, the company strengthened the management of payback, and the cash flow of operating activities changed from negative to positive, an increase of 101.82% over the same period last year.
Surveying and mapping products have great potential, and high-precision business has entered an explosive period. According to the 2018 White Paper on the Development of China Satellite Navigation and location Services Industry issued by the China Satellite Navigation Association
According to statistics, the market size of the high-precision industry reached 6.3 billion yuan in 2017, with a compound growth rate of more than 20% in the past five years. In terms of high-precision business, through a series of horizontal mergers and acquisitions, the company has opened up the upper and lower reaches of the industrial chain and expanded the application markets of surveying and mapping, precision agriculture, machinery control and other industries. Through the layout of the whole industry chain, the company creates a strong core competitiveness of products and actively grabs market share. In the first half of 2018, the company's revenue from surveying and mapping products increased by 61.67% compared with the same period last year, of which shipments of high-precision GNSS receivers exceeded 23000.
The self-organizing network business has sufficient orders on hand, which brings the driving force of continuous growth. With the gradual weakening of the impact of military reform, the pace of military information construction is accelerated during the 13th five-year Plan period, and the military ad hoc network business is expected to usher in a period of rapid growth. In 2017, the company has obtained more than 2 billion yuan of military ad hoc network product orders, according to the company announcement, 2018 so far has received 2.8 billion yuan of new orders, the first half of the confirmed revenue of 1.62 billion yuan, because the ad hoc network order confirmed revenue according to the progress of the project, the business has the basis of sustained growth, optimistically estimated that the annual revenue is expected to reach 3 billion yuan.
Strengthen the mobile layout of Beidou and strengthen the application ability of spatio-temporal information. In terms of Beidou mobile interconnection business, the company continues to improve the terminal product line, strengthen the application of advantageous industries such as public security and aviation, and actively expand intelligent transportation and smart city, and has won more than 2000 million yuan of intelligent transportation software orders; in terms of spatio-temporal information services, the company strengthens the application and expansion of "China location" and "China accuracy". "China Precision" is the fourth commercial satellite-based enhancement system in the world, which can provide centimeter positioning accuracy around the world, which will significantly improve product accuracy and provide a solid foundation for the development of high-precision business.
Risk factors: self-organizing network order payment is not as expected, competition for high-precision products is intensified, financial costs are rising too fast, and so on.
Profit forecast and investment rating. With the steady progress of the construction of Beidou No. 3 system, as a leading enterprise in the application of Beidou high-precision navigation and positioning, the company is expected to maintain the high growth of high-precision surveying and mapping and ad hoc networks. Maintain the company's annual EPS forecast of 0.59 EPS 1.19 yuan in 2018-19-20, corresponding to PE25/14/10 times, and maintain the "buy" rating.