2019Q3 realized revenue / homing net profit / deducted non-homing net profit of 254.81 Maxima 6.98 Universe 3.28 million yuan, compared with the same period last year-22.15% Universe 157% Universe 15.25%. In the short term, the negative impact of the company's traditional business has not been eliminated, and it is bullish on the improvement of the company's IDC business growth and profitability in the next three years. It is predicted that in 2019, 2020, the EPS will be 0.07, 0.30, 0.44 in 2021, and the EBITDA will be 2.4, 390, or 5.1 million yuan, maintaining the "buy" rating.
The negative impact of traditional business has not been eliminated, and the income from asset disposal has led to an increase in net profit compared with the same period last year. 2019Q3's IDC and cloud computing business benefits continue to release, and revenue increases steadily; LED lighting electronics business strategy shrinks due to macroeconomic and local financial influence; and financial electronics revenue continues to decline due to the periodic decline in banking market demand and the lower-than-expected landing of overseas projects. Dragged down by traditional business, the company's overall revenue continued to decline, its revenue structure improved, and its gross profit margin rose 0.66 PCT year-on-year to 28.68%. The scale of the three expenses themselves did not change much, but due to the decline in revenue, the expense rate increased by 4.12 PCTS to 26.17%. The company got an one-time income of 11.4 million yuan from the disposal of assets, resulting in an increase in net profit compared with the same period last year, but the net profit after deducting non-return is still declining, which is less than the decline in revenue.
Resources focus on IDC construction, Changsha / Dongguan project continues to move forward. On the asset side, subjects such as monetary funds / prepaid accounts / projects in progress increased significantly by 49% / 50% / 87% compared with the beginning of the year, and the company's IDC project construction in Changsha / Dongguan and other places progressed steadily; on the debt side, the long-term loan account increased by 2319% to 806 million yuan compared with the beginning of the year, providing financial guarantee for the company's IDC project construction. In the first three quarters of 2019, the company strengthened supply chain fund management, increased accounts receivable remittances, reduced raw material procurement expenditure, and extended the supply chain settlement cycle. Operating cash flow increased by 193.8% to 180 million yuan compared with the same period last year. At the same time, the company invested a lot of money in the construction of IDC computer rooms, and 460 million yuan was flowed out from investment activities in the first three quarters of 2019.
Many orders are advancing rapidly, and IDC/ cloud computing is expected to grow steadily. Since 2018, the company has successively signed a large IDC contract with Ping an Telecom / Changsha Mobile with a total amount of RMB 885 million. At present, the progress of Changsha Mobile project is in line with the progress, and the progress of Ping an Communications project is higher than expected, of which 885 million project is put on shelves quickly, and 2.6 billion project has entered the electromechanical and equipment installation phase. In September 2019, the company signed a "Smart bright" cloud storage equipment procurement project contract with Shenzhen Yuanrui City Intelligence, with a total price of 50 million yuan. At present, the company is actively promoting the equipment delivery and trial operation of the project. It is expected that as future orders continue to advance, the company's IDC/ cloud computing business is expected to grow steadily.
Risk factors: IDC cabinet expansion and shelving rate increase is not as expected; business transformation is not as expected.
Investment suggestion: the negative impact of the continuous decline in the company's traditional business has not been eliminated, reducing the 2019 EPS forecast to 0.07 yuan (the original value is 0.20 yuan), maintaining the 2020 EPS forecast to 0.30 EPS yuan in 2019, lowering the EBITDA forecast in 2019 to 240 million yuan (the original value is 310 million yuan), maintaining the company's 2020 IDC business growth and profitability improvement. Maintain a "buy" rating.
