Events:
Guomai Technology released its 2018 annual report and 2019 quarterly report. In 2018, the company achieved an operating income of 984 million yuan (YoY-35.15%) and a net profit of 130 million yuan (YoY-20.00%). The company intends to pay a cash dividend of 0.15 yuan (including tax) for every 10 shares to all shareholders on the basis of 1.008 billion shares.
2019Q1, the company realized operating income of 132 million yuan (YoY-65.25%) and net profit of 35.7878 million yuan (YoY-44%).
Comments:
The company's 18-year and 19-year Q1 performance is under pressure, the announced results slightly exceed the 18-year performance KuaiBao, in line with market expectations.
Due to the reduction of capital expenditure in the telecommunications industry and the adjustment of business structure in 2018, the company's performance declined. In 2018, the company achieved an operating income of 984 million yuan (YoY-35.15%) and a net profit of 130 million yuan (YoY-20.00%). The actual net profit was slightly higher than the 122 million yuan announced by KuaiBao in the 18-year performance. 19Q1 was affected by macro-policy regulation and control, and the revenue from the operation and development services of the Internet of things Science Park declined compared with the same period last year, affecting the performance in the first quarter.
Continue to optimize the business structure, the proportion of high gross profit margin business increased.
In 18 years, the company adjusted and optimized the business structure, shrinking the Internet of things technical service business with low gross profit margin. The 18-year revenue scale of the business was 537 million yuan (YoY-42.87%), the gross profit margin was 0.93% (- 6.03pcts), and the proportion of revenue decreased from 62% to 54.59%. The company's Internet of things consulting and design service achieved operating income of 134 million yuan (YoY-21.21%) over the past 18 years, with a gross profit margin of 87.74% (YoY-4.62pcts), accounting for 13.66% of revenue. The company's education business has achieved an income of 113 million yuan (YoY+22.02%) in 18 years, with a gross profit margin of 87.56% (+ 6.22pcts), accounting for 11.53% of revenue.
The company's Internet of things Science Park operation and development service revenue reached 184 million yuan (YoY-37.93%), gross profit margin reached 71.82% (YoY+9.83pcts), accounting for 18.74% of revenue. Benefiting from the optimization of the company's business structure, the company's overall gross profit margin increased from 32.84% in 2017 to 37.48% in 2018.
The rates have been slightly increased, and the proportion of R & D investment has increased.
In 2018, the company's sales expenses are 48.393 million yuan (YoY-27.08%), with a sales rate of 4.92% (+ 0.54pct); management expenses of 125 million yuan (YoY-11.73%) with a management rate of 12.70% (YoY+3.37pcts); and financial expenses of 41.7964 million yuan (YoY-12.99%) with a financial rate of 4.25% (YoY+1.08pcts). Considering that the company's sales revenue has declined in the past 18 years, the overall control of various expenses is reasonable, and the rate has been slightly increased. In terms of R & D investment, the company has 460 R & D personnel in the past 18 years, accounting for 53.86% of all employees from 48.09%; R & D investment reached 56.5018 million yuan (YoY-3.74%), accounting for 5.75% of R & D investment (YoY+1.88pcts), an increase compared with 2017.
In 1919, 5G scale testing and 4G re-ploughing led to a rebound in capital expenditure in the telecommunications industry, which benefited from the depth of network planning and design business.
In 19 years, it has benefited from 5G scale test construction and 4G re-ploughing. According to the estimated data disclosed by operators and towers, the capital expenditure of the telecommunications industry is expected to reach 330 billion yuan (YoY+4%). In 19 years, China Mobile, Telecom and China Unicom are expected to invest no more than 170 million yuan in 5G construction. According to the budget estimates disclosed in the annual reports of the three major operators and tower companies, wireless capital expenditure is expected to reach about 180 billion yuan in 19 years, an increase of 16%. Due to the high frequency band of 5G, more macro stations are needed than 4G, and a large number of microstations are used, which increases the complexity of network planning and design. The network planning and design business of Guomai Technology has been recognized by domestic operators and enterprise customers during the 4G construction period. during the peak construction period, the company's revenue reached nearly 300 million yuan. We believe that in the future peak period of 5G network construction, Guomai science and technology network design and planning business is expected to reach nearly 500 million yuan.
The company's education business gathers high-quality technical personnel, enhances the company's profitability, and lays a solid foundation for 5G and Internet of things business.
Fuzhou Institute of Technology was upgraded to an undergraduate applied university in 2015, with 42 undergraduate majors, focusing on the construction of five major groups: Internet of things, cloud computing and big data, Internet + Architecture, Internet + Finance and Internet + Business. At the end of 2018, Fuzhou Institute of Technology had more than 7200 students. In the future, with the continuous improvement of the company's professional settings and the gradual increase in the proportion of undergraduates, the enrollment scale is expected to reach 120000; the current fee standard of the college is about 25,000 yuan per year, and we expect the future income to be stable at about 250-300 million yuan. The company's core business network planning and design is a manpower-intensive industry. Fuzhou Institute of Technology can reserve a large number of interns and school enrollment sources for the company, which has obvious competitive advantages compared with its competitors.
Deep cultivation of the Internet of things industry chain, with broad business growth space.
The company's business strategy is gradually clear, through the Internet of things technical services, Internet of things park operation, Internet of things consultation and design and Internet of things related education services in-depth layout of the Internet of things industry chain. According to Gartner forecast: by 2020, the global Internet of things equipment will reach 26 billion, the market size will reach 1.9 trillion US dollars, the market space is huge. With the gradual application of NB-IoT and the development of 5G construction, the domestic Internet of things industry will significantly expand the application scene and achieve the rapid expansion of the industrial scale. Guomai Technology will rely on the advantages of technology accumulation, industrial resources, human resources and other aspects to achieve high-quality and rapid growth of business.
Earnings forecast, valuation and rating
Combined with the 2018 annual report and the first quarterly report of 2019, considering that the company has been in a business transition period for 18 years and 19Q1, and that the network planning and design business, one of the main sources of net profit, will deeply benefit from the 5G construction started in 1919, it is expected that the number of orders will increase significantly with the start of the 5G scale test. We maintain the company's homing net profit forecast of 17660million yuan in 1920 and 315 million yuan in 2021. Corresponding to the 1921 EPS0.17/0.24/0.31 yuan, the corresponding PE is 60X/43X/34X, maintaining the "buy" rating.
Risk hint: the progress of 5G network construction is not as expected, and the progress of the company's business optimization and transformation is not as expected.