Introduction to this report:
The progress of the industry's cognitive solution business project is lagging behind and not being completed on schedule, dragging down the company's revenue and profit growth rate.
Key points of investment:
Maintain the increase in holdings rating. The industry recognized that the delay in the progress of business projects put pressure on performance growth. The profit forecast for 2019-2021 was lowered to 0.5 (-0.53) /0.53 (-0.82) /0.57 yuan.
The company is deeply involved in the smart security big data business, and the industry has a lot of room for development. Referring to the industry average, 35xPE was given in 2019 based on the company's development strategy. The corresponding target price was lowered to 17.5 yuan to maintain the increase in holdings.
Performance summary: In the first three quarters of 2019, the company's revenue was 1,751 million/ -12.41%, net profit of 152 million/ -47.03%, net profit of the non-return mother was 79 million/ -68.00%. In the third quarter, the company's revenue was 647 million/ -19.24%, after deducting net profit of 3.89 million yuan/ -97.13%. As expected.
Project delays have led to a decline in performance, an improvement in the quality of cash flow, and a decrease in the cost rate for the period. The progress of the industry's cognitive solutions business project is lagging behind, leading to negative growth in revenue and profit growth.
The company's sales repayments, project investment, and bank repayments all increased in the first three quarters of 2019. The quality of cash flow improved. The cost rate for the period was 17.93% (-1.83pct), of which the sales expense ratio was 2.16 pct, the management expense ratio was 2.54 pct, and the financial expenses rate was +2.88 pct. The company increased R&D investment by 125 million yuan, an increase of 77.02% over the previous year.
Promote the full integration of data and business. The company builds an intelligent policing product system driven by data to create an iSmart smart product system; achieves digital empowerment by providing industry awareness solutions for customers' digital transformation and upgrading. The company will make every effort to deploy B-end customers, strengthen smart enterprise teams, integrate resources, and combine rich business scenarios within the company and shareholders to create smart enterprise methodologies and related products.
Risk factors: market environment risk, accounts receivable risk, technology research and development risk.