Main points of investment:
The company issues semi-annual report. In the first half of the year, the company achieved operating income of 2.368 billion yuan, an increase of 29.51% over the same period last year; net profit of 43.19 million, down 12.11% from the same period last year; and 34.72 million of non-return net profit, down 18.82% from the same period last year. Achieve a weighted average return on equity of 2.08%, down 0.37pct from the same period last year.
Gross profit margin rose month-on-month, and financial expenses dragged down net profit. In the first half of the year, the company achieved an overall gross profit margin of 16.79%, a decrease of 1.44pct over the same period last year, including a gross profit margin of 14.80% for Internet of things products and services, an increase of 2.94pct over the same period last year, and a gross profit margin of 14.96% for communications engineering services and 26.95% for communications products, respectively, down 1.42pct and 0.45pct. From a month-on-month point of view, Q2's overall gross profit margin is 19.31%, a month-on-month increase in 4.23pct. As the income share of the Internet of things continues to increase, the overall gross profit margin for the whole year is expected to increase. The company's Internet of things solution business is in a period of rapid development, with a strong demand for working capital, which is mainly solved through debt financing. The financial expense rate in the first half of the year increased 1.28pct compared with the same period last year, dragging down the overall net interest rate.
The four major tracks and three major product lines of the Internet of things continue to enrich service capacity, and revenue has increased significantly compared with the same period last year. In the first half of the year, the company's revenue from Internet of things products and services reached 1.356 billion yuan, an increase of 119.83% over the same period last year, mainly due to the continuous improvement of the watch core communication and product categories in March last year. The company takes the artificial intelligence Internet of things (AIoT) leader as the strategic positioning, arranges three product lines of large and medium-sized stations, AIoT intelligent devices and widely cooperative intelligent terminals, and extends the four major races of 5G IoT module, IoT cloud platform, intelligent IoT solution and intelligent IoT equipment. In terms of modules, the R & D and procurement integration of Xuntong and Longshang Technology continued to be strengthened. during the reporting period, the total income of the two module subsidiaries reached 732 million yuan, an increase of 19.03% over the same period last year. In terms of non-module business, the solution has been gradually landed with orders on hand. at present, smart city, smart transportation and smart agriculture projects have been implemented in Shanghai, Hebei, Yan'an, Dalian and other cities. in the first half of the year, we successfully won the bid for Yan'an Smart City Phase II project and accepted the Shenzhen International Convention and Exhibition Center software platform project.
General service and equipment business under short-term pressure, the company seized the money to adjust the structure to improve the quality of operation. Due to the adjustment of the investment structure of operators, investment in communications technology services and ODN equipment decreased in the first half of the year, and the company's communications services and communications equipment business revenue fell 8.97% and 29.37% respectively compared with the same period last year. The company pays close attention to the money back in the general service sector, expand the data center business to reduce the pressure of revenue decline, while with the help of the Internet of things to achieve the intelligent transformation of traditional communication equipment, take the initiative to streamline the product structure.
Downgrade the profit forecast and be optimistic about the long-term layout of the Internet of things. Due to the lower-than-expected growth in module revenue and the decline in revenue from general services and equipment, we lowered the company's home net profit forecast from 2.2 million to 2.0 million, with the current share price corresponding to the price-to-earnings ratio in 35-28-24. The layout of the "end cloud use" of the company's Internet of things is perfect, and the enabling value is expected to be reflected step by step. With reference to the current A-share Internet of things comparable company's 2019 price-to-earnings ratio, the reasonable valuation level is 38-40 times, corresponding to the target price of 19.4-20.4, maintaining the "overweight" rating.
Risk hint. The high asset-liability ratio lies in the hidden danger of anti-risk ability, the business development of the Internet of things platform is not as fast as expected, and the order of the Internet of things solution is not as expected.