The company issued a forecast for the first three quarters of 2019, with an estimated profit of 349 million yuan to 407 million yuan, compared with a loss of 2.4626 million yuan in the same period last year. It is estimated that the profit in the third quarter is 304 million yuan to 362 million yuan, an increase of 21478% to 25614% over the same period last year.
The ETC policy is constantly catalysed and strongly implemented. At the beginning of June, the National Development and Reform Commission and the Ministry of Transport issued the implementation Plan for accelerating the Application Service of Electronic non-stop Expressway Toll Collection, pointing out that by the end of December 2019, the number of ETC users in the country had exceeded 180 million, the expressway toll station ETC was fully covered, ETC lane became the main toll lane, trucks realized non-stop toll collection, and the expressway non-stop fast toll rate reached more than 90%. All manual toll lanes support electronic toll collection methods such as mobile payment, which significantly improves the level of highway non-stop toll service.
Many places ETC won the bid to highlight the company's leading position in the industry. In July 2019, the company became the "Jiangsu networking expressway ETC gantry system and lane RSU antenna and control system equipment procurement project bid section 1 and section 2" of Jiangsu Expressway Network Operation and Management Co., Ltd., with a total bid amount of 263 million yuan. In August 2019, the company signed a "vehicle Electronic tag (OBU) supply Agreement" with Shandong Expressway Xinlian payment Co., Ltd., promising to pay Xinlian for the supply of no less than 8.95 million Bluetooth ETC vehicle Electronic tags (OBU) of specified models from July to September 2019. In addition, Tongxangbao will purchase 6.8 million ETC tags from the company under a contract period from August 1, 2019 to October 31, 2019. A number of large orders won the bid to highlight the company's leading position in the industry.
Carry out strategic cooperation with Tencent in the field of intelligent transportation. The company signed the Strategic Cooperation Framework Agreement with Tencent Technology (Shenzhen) Co., Ltd. on August 23, 2019. Taking advantage of their respective advantages, the two sides will conduct in-depth cooperation in V2X, multi-sensor fusion, vehicle-road coordination and self-driving, and in-vehicle terminal services based on intelligent networking system cloud in the future.
Investment suggestion: the company's EPS from 2019 to 2020 is expected to be 6.81yuan and 7.86yuan respectively, with a buy-A rating and a six-month target price of 85 yuan.
Risk hint: the promotion of ETC policy is weaker than expected; the competition in the industry intensifies.
