Event: the company issued a forecast for the third quarterly report in 2019, with a pre-increase in net profit of more than 21478%.
On October 13, 2019, the company issued a forecast for the third quarterly report of 2019, showing a net profit of 3.49-407 million yuan in the first three quarters, compared with a loss of 2.4626 million yuan in the same period last year; and a net profit of 304 million yuan to 362 million yuan in the third quarter of 2019, an increase of 21477.98% and 25613.56% over the same period last year.
II. Comments: demand exceeds market expectations, and performance is expected to accelerate growth
The market's general expectation for the ETC industry is that the number of users will reach 180 million. According to the speech made by Minister of Transport Li Xiaopeng on September 18, the target is that the circulation volume should reach 80% of the car ownership. According to the calculation of the 240 million car ownership in 2018, the corresponding ETC user volume target is 192 million, exceeding market expectations. Supported by daily circulation data, according to the estimate of 130 million users on September 18, the target of 180 million requires only 476000 daily circulation, while the current daily circulation of 600000 can achieve 80% of ETC users by the end of the year, that is, nearly 200 million users.
We consider that the preferential policy of highway ETC tolls will be implemented at the beginning of 2020, and with the approach of Spring Festival transportation, ETC issuance is expected to accelerate growth in the fourth quarter, leading to sustained and rapid growth of the company's performance. In addition, we believe that with the popularization of ETC, the development of 5G communication technology and China's independent Beidou technology, ETC equipment will become an important entrance to car networking, the company's layout in V2X is earlier, and it cooperates with Sinotruk, BAIC, Dongfeng and other car factories, with large-scale sales of products, future performance is expected to continue to grow.
III. Investment suggestions
Taking into account the future market demand, it is estimated that the EPS from 2019 to 2021 will be 679, 448 and 233 million respectively, corresponding to the corresponding PE of 9.4, 14.2 and 27.3 times, respectively. With reference to the comparable company's valuation and the company's leading position in the industry, it will be given a "recommended" rating.
Fourth, risk tips:
The technical standard of the industry has changed; if the enterprise capacity expands too much, there is a possibility of surplus in the future.