Core ideas:
1) the company is deeply engaged in the field of identification and is the leader of domestic security license. The company is the only company selected in the ICAO standard in China, supplying passport issuing equipment to the Ministry of Public Security.
2) the prosperity of the industry is high, the performance is high in 18 years, and profitability is expected to pick up in 19 years.
Benefiting from the upgrading cycle of downstream equipment and the smooth expansion of overseas business, the company's 18-year revenue and deducted non-net profit increased by 57.9% and 50% respectively compared with the same period last year. The net profit in the first half of 1919 is expected to increase by 31% Murray 39%. 18 years upstream electronic components caused by supply and demand caused a rising tide, from the Huaqiang North price index trend, the company needs all kinds of raw materials may have entered the price reduction cycle, the company's profitability is expected to pick up in the future.
3) identity identification: the competitive advantage of the business is significant, and the demand for downstream applications is strong. The company has mastered the core technology of identification, and there is no strong domestic competitor in the field of entry and exit security license. The demand for citizens to leave the country continues to increase, and convenient management will encourage management departments at all levels to continue to invest. At the same time, the company closely follows the "Belt and Road Initiative" construction plan, has provided identification-related services to a number of countries along the route, and won the Nigerian presidential election equipment renewal project again in 19 years. We believe that with the gradual deepening of the construction of "Belt and Road Initiative", the company has a broad space for overseas business.
4) the investment in public transport infrastructure continues to increase, and join hands with giants to explore new ways to facilitate people's travel.
The company is the leading service provider of rail transit AFC/ACC system. Based on 1% of the investment, the AFC/ACC market space of the rail transit construction plan recently approved by the National Development and Reform Commission can reach 8.6 billion yuan. Over the past 18 years, the company has signed intelligent transportation strategic agreements with BABA and Tencent, and is expected to build a new intelligent transportation service system with intelligent vehicle hardware and data services in the future.
5) profit forecast and investment rating. According to the profit forecast, the EPS from 2019 to 2021 is 1.06 yuan / 1.40 yuan / 1.79 yuan respectively. The corresponding price-to-earnings ratio is 23.8 / 18 / 14.1. The company's leading position in the field of security license is solid, and digital identity-related applications are expected to become a new growth point, giving an "overweight" rating for the first time.
6) risk hints: increased competition in intelligent transportation business, changes in the policy environment, and changes in the international situation affect overseas business.