This report is read as follows:
The consolidation table of Liaoning Post and Telecommunications Planning and Design Institute has been completed, and the risk of impairment has been eliminated; the planned order covers the market constantly, and the certainty of high performance growth increases.
Main points of investment:
Maintain the "overweight" rating and keep the target price of 32.24 unchanged. The company announced its 2018 results KuaiBao achieved a net profit of 118 million yuan in 2018, from which earnings per share were calculated to be 0.69 yuan. according to our performance, KuaiBao revised the 2018 EPS to 0.69 (- 30.79%), mainly because the 2018 operator design business procurement has not yet been volume, the company restructuring costs are high. Considering the accelerated commercial development of 5G in 2019 and 2020, operators have increased their capital expenditure to maintain EPS at 1.31,1.74 yuan from 2019 to 2020. With reference to the valuation of comparable companies, and considering that the demand boom of the network planning and design industry increases with 5G certainty, Hengshi Technology is given a valuation of 25 times in 2019, corresponding to the target price of 32.24 yuan, remain unchanged, and maintain the "overweight" rating.
Liaoning Post merge table completed, looking forward to performance take-off: Liaoning posts and Telecommunications Planning and Design Institute Co., Ltd. was incorporated into the scope of the company's consolidated statements in May 2018, injecting new vitality into the company's performance, and the impairment risk has been eliminated. The follow-up will be light to accelerate the pace of increase. Judging from the quarter-on-quarter comparison of operating income, it is expected that 2019 will continue to maintain a high growth trend in the fourth quarter of 2018.
Order coverage continues to extend, and market penetration continues to increase: the traditional business areas of Liaoning posts and Telecommunications Design Institute are concentrated in Northeast and North China. In 2019, the planning and design business coverage market began to extend from the traditional Northeast and North China to Central and Southwest China. China Tower Corporation's two planning and design tenders in 2019 Liaoning posts and Telecommunications Planning and Design Institute have won the bid, the domestic market continues to penetrate, and the market recognition has been significantly improved.
Catalyst. 5G brings about the expansion of planning market and the increase of market share of planning and design.
Risk hint. Industry competition aggravates the risk; 5G investment is lower than expected.