Events:
The company released its 2018 annual report on April 22, 2018 operating income was 1.036 billion yuan, up 10.64% over the same period last year; net profit from home was-370 million yuan, down 590.55% from the same period last year; net profit from non-return was-436 million yuan, down 935.95% from the same period last year; on the same day, the company also released a quarterly report for 2019. During the reporting period, the company achieved operating income of 160 million yuan, down 38.16% from the same period last year. The net profit of returning to the mother was 54 million yuan, an increase of 68.52% over the same period last year, while the net profit of non-return was 1 million yuan, an increase of 95.28% over the same period last year.
Comments:
With the rapid growth of smart hardware, smart marketing is expected to pick up. In 2018, the company's smart marketing revenue was 433 million yuan, down 23.85% from the same period last year, mainly due to the impact of industry restructuring, economic downturn and Sino-US trade frictions, the company's smart marketing performance was lower than expected, so the provision for large goodwill impairment was included; in the smart hardware sector, the revenue of LED lighting products was 393 million yuan, an increase of 92.2% over the same period last year. The revenue of intelligent hardware manufacturing was 192 million yuan, an increase of 35.53% over the same period last year, mainly due to the company's reserve of high-quality customers such as ABL and ASM PT, and actively expand new product categories in addition to traditional products.
With the integration of smart marketing, the cost is expected to fall. In 2018, the company's sales expenses were 39 million yuan, an increase of 40.68% over the same period last year, with an expense rate of 3.73%; management expenses of 86 million yuan, an increase of 18.57% over the same period last year, with an expense rate of 8.34%; financial expenses of-5 million yuan, an increase of 63.97% over the same period last year, with an expense rate of-0.50%; and R & D expenses of 35 million yuan, an increase of 92.13% over the same period last year, with an expense rate of 3.34%.
The sharp increase in company fees and R & D expenses is mainly due to the increase in labor compensation, the reclassification of financial income originally included in financial expenses to investment income, and the increase in the number of R & D personnel.
With the global layout of intelligent hardware, SaaS is developing rapidly. The company invests in the establishment of Yiming Optoelectronics, Yida and Yizhi to open up the international lighting market, the domestic lighting market in new retail areas and the smart lock market. The domestic SaaS market is in a stable and rapid development stage. It is expected that the domestic market will reach 47.34 billion yuan in 2020. The SaaS platform independently developed by the company is expected to benefit from it.
Maintain a "buy" rating. We are optimistic about the good development trend of the company's SaaS platform and the steady development of traditional business intelligence hardware. It is estimated that the company's EPS in 2019-2021 will be 0.21 EPS 0.24max 0.27 yuan respectively, and the corresponding PE will be 39-34-30 times, maintaining a "buy" rating.
Risk hint: the development of smart marketing market is not as expected, and the demand for smart hardware is not as expected.