This report is read as follows:
The company's business is significantly affected by seasonality, with a significant improvement in net profit in the third quarter compared with the previous quarter. Revenue growth in the first three quarters is affected to a certain extent by customers' deferred purchases, and performance is expected to grow rapidly in the fourth quarter.
Main points of investment:
Maintain the "overweight" rating. The company's revenue in the first three quarters increased by 11.87%, profit decreased by 83.64% compared with the same period last year, revenue in the third quarter increased by 23.49%, profit increased by 134.34%, and R & D expenses were 499 million yuan, accounting for 28.91% of revenue. The reason is mainly due to the adjustment of the company's product structure, as a result of the company's increased investment in R & D and sales, the net profit forecast for 2019 is reduced to 198 million yuan (- 47.9%). The EPS is 0.39 yuan (- 48%), the net profit for 2020-2021 is 466 million yuan and 606 million yuan respectively, and the EPS forecast is 0.92 yuan and 1.20 yuan respectively, which values the company 25 times in 2020 and maintains the target price of 22.74 yuan.
The overall scale of the undertaking project became larger, the accounts receivable increased significantly compared with the same period last year, and the gross profit margin decreased compared with the same period last year.
80% of the company's customers come from the government, and they undertake projects from the original video system products developed by themselves. With the increase in the number of external products from rich sources, many projects have been implemented in the third quarter, resulting in a significant increase in the company's operating costs. Accounts receivable increased by 61% year-on-year, and gross profit margin decreased by nearly 10 points year-on-year.
The cloud video industry has great potential, and the company's core technological advantages have significantly increased R & D efforts. The market generally believes that the company's short-term performance is difficult to repair, we believe that the company has been in the video industry for many years, and the issuance of convertible bonds has strengthened its determination to invest in cloud video technology. The cloud video industry will break out next year, and the company is expected to reverse its performance next year through personnel structure optimization and adjustment.
Catalyst: acceleration of government video bidding; acceleration of cloud video vertical industry development.
Risk factors: the landing of new business is not as expected; competition in the industry is intensified; technology research and development is not as expected.
