Operating income increased by 29.42% in the first three quarters, in line with expectations.
According to the company's three-quarter report, 19Q1-Q3 achieved an operating income of 2.497 billion yuan, an increase of 29.42% over the same period last year, and a net profit of 89.0269 million yuan, an increase of 13.81% over the same period last year, deducting 74.9002 million yuan from non-net profit, an increase of 15.76% over the same period last year. 19Q3 achieved an operating income of 904 million yuan, an increase of 21.08% over the same period last year, and a net profit of 44.2198 million yuan, an increase of 10.92% over the same period last year, deducting 40.0375 million yuan from non-net profit, an increase of 10.82% over the same period last year, which is at the median level of the performance forecast, in line with expectations. The company has been ploughing telecommunications, finance, public security and other vertical industries for many years, and has accumulated core advantages, which is expected to benefit from the opportunities brought by the improvement of IT cloud prosperity. The EPS is expected to be 0.40,0.50 and 0.66 yuan respectively from 2019 to 2021, maintaining a "buy" rating.
Performance growth is in line with expectations, distribution and financial business continue to grow
In the first three quarters of 2019, the company benefited from the rapid growth of distribution and financial business, achieving an increase of 29.42% in operating revenue and 13.81% in net profit. Among them, the financial business benefited from the strong demand for risk control and collection of bank credit. Operating income and profits based on credit risk control continued to grow rapidly. Due to the increase in the proportion of distribution revenue, but the low gross profit margin of this business, the overall gross profit margin of the company is 20.18%, down from 23.96% in the same period last year, making the overall profit growth level slightly lower than the revenue growth level. in the future, with the gradual landing of telecommunications, public security and government contracts, it is expected to achieve a simultaneous increase in gross profit margin, revenue and profit.
Continuous R & D investment to save energy for future development
19Q1-Q3 's R & D investment totaled 159 million yuan, an increase of 10 million from 149 million yuan in the same period last year. The company continues to improve its R & D strength, gradually forming the technology platform and product system of big data and artificial intelligence, while deepening in the fields of telecommunications, public security and finance, to provide large and medium-sized enterprise customers with big data + property, energy, agriculture, manufacturing and other industries comprehensive solutions and cloud solutions, continuous R & D investment to save energy for cross-industry development.
The contract volume is gradually increased to achieve sustainable growth.
Tianyuan Dike occupies a high market position in the field of traditional operator BOSS, and is expected to achieve a continuous increase in its share in the context of increased market concentration. The public security industry made a rapid breakthrough in the market, adjusted its competition strategy in line with the market environment, and realized the expansion of new markets such as Foshan, Zhanjiang, Chongqing, Ezhou, Jurong, Suqian, Shaoyang, Linwei and Chifeng, with a substantial increase in contract value compared with last year. We expect the company's contract this year to lay the foundation for continued growth.
Be optimistic about the sustainable development of the company and maintain the "buy" rating.
We are optimistic about the core advantages that the company has accumulated in the vertical industry for a long time, and are expected to benefit from the improvement of IT cloud prosperity in the 5G era, resulting in a multi-point blossom in the three major fields of operators, government and finance. Considering the decline in gross profit margin caused by the change in the company's product structure and the increase in R & D expenses, the company's performance forecast is lowered. The company's EPS in 2019-2021 is expected to be 0.40,0.50 and 0.66 yuan respectively (previously predicted to be 0.44,0.60 and 0.81 yuan). With reference to the average 2019 valuation of A-share companies of the same type, the company's 19-year PE is 25-30 times. Corresponding to the target price of 10-12 yuan per share, maintain the "buy" rating.
Risk hint: operator capital expenditure decline risk, M & A business performance is not as expected.