This report is read as follows:
After completing the business iteration in 2018, revenue fell but gross profit increased, and net profit increased more than tenfold in the first quarter of 2019 compared with the previous quarter. Planning and design business, industry-education integration layout of the pension industry, the Internet of things broad space to promote long-term profits.
Main points of investment:
Maintain the "overweight" rating and raise the target price to 14.00 yuan. It is predicted that the operating income of the company from 2019 to 2021 is 1.098 billion yuan, 1.432 billion yuan and 1.833 billion yuan respectively. Based on the increase in gross profit, EPS in 2018 was slightly higher than expected, raising the forecast for 2018 and 2020, net profit was 350 million yuan and 446 million yuan, net profit increased by 169% and 27% respectively, and earnings per share were 0.35 yuan (+ 12.9%) and 0.44 yuan (+ 12.8%) respectively. It is forecast that the net profit in 2021 will be 576 million yuan, with a net profit increase of 29% and earnings per share of 0.57 yuan. Give Guomai Technology 40 times valuation in 2019, raise the target price to 14.00 yuan (the original target price is 10.85 yuan), and maintain the "overweight" rating.
During the labor pains of structural adjustment, profitability improved significantly: the company adjusted its business structure and disposed of non-strategic core businesses and businesses with relatively low gross profit margins, although revenue and profit decreased in 2018, however, based on the performance in the first quarter of 2019, the bottom of the profit has been revealed, the company has transferred to the business model of high gross margin, and profit is expected to accelerate growth.
5G commercial planning and design gives priority to benefit, three major engines drive the rapid growth of the company's profits: planning and design is the front-end business, with the company's penetration in planning and design business continues to increase, based on the improvement of profitability, the rapid benefit of 5G commercial front-end planning, the layout of the pension industry in line with the policy direction and the growth space of the Internet of things, it is predicted that 2019 revenue will increase compared with 2018, but profits will increase significantly.
Catalyst. The commercial process of 5G has been accelerated, the demand for planning and design business has increased, and the state has issued relevant policies on the integration of industry and education based on the old-age industry.
Risk hint. 5G construction schedule is later than expected; technical risk; business development of industrial park is limited.