Gather sand into towers and accumulate water into abyss, and 3D communication creates the king of terminal monetization. Since its establishment, the company has mainly engaged in communication network optimization coverage business, and entered the Internet advertising industry through the merger and acquisition of Juwang Technology in 2017. Through in-depth participation in all aspects of the mobile communication and Internet industry chain service, the company is gradually developing into a first-class domestic mobile communication equipment and mobile Internet information integrated service provider, continuously enhancing the monetization capabilities of access terminals and traffic terminals.
2018 was the first year after the company's restructuring. The Internet advertising and media business increased dramatically, driving the company's revenue to 3.55 billion yuan, an increase of 200% over the previous year, and Guimu's net profit was 215 million yuan, an increase of 354% over the previous year. The company has entered a stage of rapid development with two-wheel drive.
“Connect to the end”: Specific application scenarios, horizontal extension of core capabilities. There have been bottlenecks in the development of the domestic Internet premium market in recent years, and fierce competition has led to a downward trend in the industry as a whole. However, the full commencement of 5G construction in 2019 will provide a long-term impetus for the optimized coverage of wireless networks in the market. The construction of 5G networks has brought about an increase in the number of network excellent equipment, and the performance requirements for network excellent equipment are higher, and the technical strength requirements for service providers are higher, which is expected to drive the company's business recovery. At the same time, the company has dug deep into extended scenarios of network optimization capabilities, and has been deployed in fields such as signal management and control, maritime satellite communications, and 5G smart light poles, and has achieved good market results. The monetization capability of connecting terminals has been enhanced, opening up space for future growth.
“End of traffic”: Valuation of accurate advertising, leapfrogging across borders to enjoy industry dividends. Accurate distribution solves the pain points of the advertising industry, and new media is gradually replacing traditional media and becoming a rapidly developing segment. Juwang Technology is an early domestic provider focusing on Internet advertising services. It has developed a clear first-mover advantage in many aspects such as industry experience, upstream and downstream resources, technology, and talent. The company has established deep and stable partnerships with leading Internet companies such as Tencent, Baidu, 360, ByteDance, Quheadline, and Weibo, and has used giants to achieve rapid development. At the same time, platform operation capabilities have improved, self-media and game intermodal transportation services have blossomed more, and terminal traffic monetization capabilities have been greatly enhanced.
Giving an “increase in holdings” rating, the target price is 9.40 yuan. As 5G construction reaches its peak, demand for optimized coverage of 5G networks is gradually emerging. Smart light poles, satellite communications, signal management products, etc. are gaining strength simultaneously, and the Internet advertising industry continues to develop rapidly. Giwang Technology is expected to exceed its performance promises. We predict that the company's EPS in 2019-2020 will be 0.36/0.45/0.57 yuan. Considering that the company's strong monetization ability at the access end and traffic end will give a certain valuation premium, 26 times PE in 2019, with a target price of 9.40 yuan.
Risk warning: 5G construction progress falls short of expectations, demand for network optimization coverage has not been released, etc.
