Introduction to this report:
The company's core products account for a high share of revenue. The company's operating income and gross margin rebounded sharply in 2019. Continued investment in R&D enhanced core competitiveness. Market trends in the three major industries were highlighted, helping the company's entrepreneurial performance.
Key points of investment:
Profit forecasting and investment advice: First coverage, giving a “prudent increase in holdings” rating. The net profit of Guangha Communications from 2019 to 2021 is expected to be 72 million yuan, 88 million yuan and 114 million yuan respectively, up 362.17%, 22.07% and 29.30% year-on-year. Each EPS share was $0.50, $0.61, and $0.79, respectively. The company was affected by delays in order demand in 2018, which is expected to be eliminated in 2019. Considering the steady increase in Guanghakang Telecom's defense and electricity market business, it has achieved remarkable results in the railway market. We gave Guangha Communications 50.40 times its PE valuation in 2019, and the corresponding target price was 25.20 yuan.
The company's core products accounted for a high share of revenue, and the company's operating income and gross margin rebounded in 2019. Currently, the company's main products are command and dispatch systems and other terminal products. The proportion of the company's core products in total operating income has increased. Since 2019, the company's defense and electricity market business has been rising steadily. The railway market business has made great progress compared to the same period, and operating income has increased year-on-year. Revenue increased 60.93% year-on-year in the first quarter of 2019, and gross sales margin rebounded to 46.83%.
Core competitiveness guarantees the company's leading position. The markets in the three major industries are favorable, and there is plenty of room for growth in the company's performance. The company continues to invest in R&D every year, enhancing product competitiveness and ensuring the company's leading market position in the command and dispatch communication industry. Command and dispatch systems in the defense and military industry are in high demand; the application demand for command and dispatch systems in the power industry continues to grow steadily; the railway information system market will reach 78.8 billion yuan in 2020, and the company's performance is about to take off.
catalysts. The power and defense industries are advancing at an accelerated pace; business in the railway sector is developing smoothly.
risk factors. Industry competition risk; risk of high industry and customer concentration.
