Event

According to the company announcement, Guo Xinping, the controlling shareholder and actual controller, signed the "Equity transfer intention Agreement" with the State-owned Capital Operation and Management Center of Haidian District, Beijing on January 3, intending to introduce Haidian State-owned assets Center as the company's strategic investor.

Business analysis

Signed an equity transfer intention agreement with Haidian State-owned assets Center, and proposed to introduce it as a strategic investor: the company's controlling shareholder and actual controller signed the "Equity transfer intention Agreement" with the State-owned Capital Operation and Management Center of Haidian District, Beijing. It is proposed to introduce Haidian State assets as the company's strategic investor to provide support for the healthy development of the company. The equity transfer is proposed to be in the form of cash acquisition. Guo Xinping, the actual controller of Haidian State assets, will hold 5% to 20% of the shares of the listed company, with a maximum of 149 million shares. The transfer price shall be based on a 10% discount on the closing price of the trading day before the date of signing of the formal share transfer agreement, and the final agreement shall prevail after consultation between the two parties.

Business and capital resources are expected to be broadened, which is conducive to the stable development of the company's long-term operation: we believe that the introduction of Haidian State-owned assets Center as a strategic investor will have a beneficial impact on the long-term development of listed companies: first, the company is expected to rely on Haidian SASAC to open up more local government customers, which is conducive to the further expansion of intelligent public security and other businesses. Second, Haidian State assets Center will give liquidity support to the company through a variety of ways, which is conducive to the expansion of the company's financial resources; third, it is expected to alleviate the current equity pledge pressure of the company and further optimize the ownership structure.

The company is a military-civilian integration high-quality enterprise, self-organizing network and navigation application dual drive: the company is a high-quality military-civilian integration enterprise, with satellite navigation applications, military ad hoc network two advantage business, downstream throughout surveying and mapping, precision agriculture, aviation dispatching, military and other core areas. At present, with the advantages of technology and channels, the company is actively expanding multi-point applications and building a rational business structure. We believe that the model of ad hoc network driving high growth and providing sufficient growth for navigation applications will enable the company to enter a stage of rapid development.

Profit adjustment and investment suggestions

We estimate that the company's revenue from 2018 to 2020 will be 53.86%, 64.14%, 7.535 billion yuan, an increase of 135.4%, 19.1%, 17.5%, and a home net profit of 3.61%, 514,665 million yuan, an increase of 49.26%, 42.34%, 29.47%. The current share price maintains an "overweight" rating corresponding to 22X18PE, 16X19PE and 12X20PE.

Risk hint

The assembly and upgrading of military communications equipment is not as expected; the goodwill impairment risk caused by the acquisition target and the company's business coordination is not expected; the risk of lifting the ban on restricted shares (2019.9.27).