Introduction to this report:
The domestic and overseas photovoltaic power plants controlled by the company were put into operation earlier and their profitability is high; the products related to the integrated circuit companies under the company are completely autonomous and controllable. Under the general trend of autonomy and control, future market potential can be anticipated.
Key points of investment:
Investment advice: The target price is 5.3 yuan, covering a “neutral” rating for the first time. EPS is expected to be 0.06, 0.07, and 0.09 yuan respectively in 2019-2021. Based on PE and PB valuation results, the target price is 5.3 yuan, covering a “neutral” rating for the first time.
The business focuses on the three major sectors of information technology, new energy, and equity investment. The company's main business includes three parts: information technology, new energy, and equity investment. Judging from the revenue structure, the company's main revenue comes from chip design and application and photovoltaic power plants. In 2018, revenue came from 472 million yuan, of which chip design and application was 215 million yuan, accounting for 45.6%, and photovoltaic power plants were 153 million yuan, accounting for 32.5%.
Most photovoltaic power plants are located overseas, put into operation early, and the electricity price advantage is outstanding. The company's new energy business is mainly the operation and management of photovoltaic power plants. Since 2010, the company has successively built photovoltaic power plants in Italy, the United States, Germany, Bulgaria, Romania, and the Xinjiang Jiangsu region of China. As of June 30, 2019, the installed capacity of the company's solar power plant was 88.54MW. More overseas power plants were connected to the grid than in 2011-2012, and the Xinjiang power station was connected to the grid at the end of 2013. Therefore, the electricity price subsidy for the company's power plants was higher than the power plants built later, and the profitability was better.
Autonomous and controllable chips have received strong support from the country, and there is broad scope for development. The company's layout in the information technology field mainly includes smart card business and integrated circuit business. Among them, the smart card business is actively seeking transformation and upgrading. The integrated circuit business currently does not contribute much profit, but we believe that future development prospects are broad in the context of independent use. Currently, China's chips are highly dependent on the outside world, but based on the country's information security needs, the country attaches great importance to the autonomy and control of integrated circuits, and has strengthened its support for the promotion of autonomous and controllable chips. The products related to the integrated circuit companies under the company are fully autonomous and controllable and have stable performance. Under the macro market environment and the general trend of autonomy and control, future market potential can be expected.
Risk factors: industry policy risk, exchange rate risk, technology risk