In 2018, the company realized revenue / return net profit of 1.33 billion yuan, compared with the same period last year. The profit was-20.8% and 659.7%, which was lower than that disclosed by KuaiBao. High growth in IDC and cloud computing business, declining contract energy, rising expense rates and significant asset write-downs drag on performance. In the future, with the expansion of IDC cabinets and the improvement of shelves, performance is expected to hit bottom and pick up. Maintain the 2019 / 2020 EPS forecast of 0.32 yuan 0.47 yuan, increase the 2021 EPS forecast of 0.58 yuan, maintain the 2019 EBITDA forecast of 3.91 billion yuan in 2020, and forecast the EBITDA of 580 million yuan in 2021, maintaining the "buy" rating.
IDC/ cloud computing is growing rapidly, revenue from traditional businesses is declining, and contract energy is a drag on performance. Financial electronics revenue 410 million (- 23.2%), gross profit margin 18.8% (- 1.26pcts); IDC put into operation, IDC/ cloud computing revenue 350 million (+ 61.66%), gross profit margin 24.6% (+ 3.92pcts) Due to tight credit and policy changes related to lighting engineering, the company took the initiative to strengthen project screening and risk control, lighting electronics revenue 280 million (- 24.07%), gross profit margin 23.5% (+ 1.40pcts), contract energy revenue 90 million (- 66.3%), gross profit margin 15.3% (- 28.90pcts). The decline of contract energy revenue / gross profit margin far exceeds that of traditional businesses such as financial electronics / lighting electronics, becoming an important drag on performance.
Substantial asset impairment erodes profits and strengthens the risk control of operating cash flow. In 2018, the company's sales expenses were 122 million (- 11.7%); management expenses were 99 million (+ 19.3%); short-term borrowing increased and loan interest rates increased, financial expenses 76 million (+ 109.5%); increased investment in areas such as self-service terminals / intelligent POS/ card Tongyun, R & D expenses of 88 million (+ 18.41%).
Although the increase in expense rate has eroded profits, the provision of 226 million of the impairment loss of assets directly leads to large losses. Of these, 112 million of bad debts (52 million yuan in the previous period) were mainly due to "deleveraging" by local governments, while inventory prices fell by 114 million (16 million yuan in the previous period), mainly due to the decline in traditional business. Part of the reason for the significant asset impairment is that the company takes the initiative to strengthen risk control and speed up the payback, which also leads to the positive operating cash flow of the company (24 million yuan, compared with-725 million yuan in the previous period).
Business is expected to hit bottom and pick up, and IDC is about to make a big profit. After the transformation in 2018, the company combed out the three major business sectors of financial electronics / lighting electronics / IDC. In the future, it is expected to strengthen risk control and technological innovation, and vigorously develop IDC/ cloud computing.
At present, Guangdong-Hong Kong-Macau Greater Bay Area has a deep layout of 15,000 cabinets, with 4200 cabinets on the shelves at the end of 2017. after 2018, it has signed large long-term contracts with Ping an Communications (1454 cabinets for 8 years and 885 million), Changsha Mobile (1500 cabinets for 10 years and 711 million) and Ping an Technology (2620 cabinets for 10 years and 2.6 billion). In the future, with the expansion of cabinets / improvement of shelving rate / optimization of customer structure, IDC business revenue / gross profit margin is expected to continue to rise, gradually becoming the driving force for the company's growth, leading to a bottom rebound in operating performance.
Risk factors: the expansion of IDC cabinets and the increase in shelving rate are not as expected.
Investment suggestion: it is optimistic that the company's business will bottom out and rebound and IDC business will grow at a high speed in the next three years. We maintain the 2019 / 2020 EPS forecast of 0.32 yuan 0.47 yuan and the 2021 EPS of 0.58 yuan, maintain the 2019 and 2020 EBITDA forecast of 391,100 million yuan and forecast 2021 EBITDA of 580 million yuan, maintaining the "buy" rating.
