1) the results in the first three quarters are in line with expectations. In the first three quarters of 1919, the company achieved operating income of 474 million yuan, an increase of 32.74% over the same period last year, net profit of 77.63 million yuan, an increase of 32.02% over the same period last year, and non-net profit of 73.07 million yuan, an increase of 36.58% over the same period last year.
2) the company's business has made steady progress, and the growth rate of performance has rebounded in the third quarter. During the reporting period, the company's business progressed steadily, Q3 revenue increased by 28% year-on-year, compared with Q2 increased by 8.4%; net profit increased by 29% year-on-year, a significant increase in 32pct compared with Q2.
3) the gross profit margin increased slightly and the investment in R & D increased. During the reporting period, due to the stabilization of the price of upstream electronic components, the company's gross profit margin was 46.47%, an increase of 0.9pct over the same period last year. The company's R & D investment reached 67.05 million yuan, an increase of 64.09% over the same period last year, accounting for 14.15% of the income. The company continues to strengthen research and development, consolidate its own technical barriers, the gross profit margin increases steadily, and the annual performance is expected.
4) mastering the core technology of identity recognition and expanding the field of vertical application. The process of comprehensive digitization in China has been an established trend, and the volume of digital economy is constantly expanding. Relying on its huge technical advantages in the field of domestic e-passport, the company has extended the application of trusted identification technology to intelligent policing, public transport, presidential election and other fields. Over the past 19 years, the "Digital identity" cooperation project with Tencent has been continuously promoted and has been successfully operated in many regions of the country. In terms of overseas business, the company has landed related projects in a number of countries along the route following the national "Belt and Road Initiative" strategy. We believe that identification occupies a pivotal position in the digital age, the company's business strategy adjustment is timely, performance growth is steady, R & D investment is increasing, product structure and business layout are optimized, and the long-term growth space is huge.
5) maintain the "overweight" rating. It is estimated that the EPS from 2019 to 2021 will be 1.06 yuan / 1.40 yuan / 1.79 yuan respectively, and the corresponding price-earnings ratio will be 28 times / 21 times / 16 times. The company is the leader of entry and exit license, the core technical barrier of trusted identity identification is high, the strategy of "digital identity" is advancing smoothly, the future development prospect is broad, and the rating of "increasing" is maintained.
6) risk hints: under the influence of the international situation, the promotion of overseas business is blocked, the development of digital identity business is not as expected, and the competition of intelligent transportation business is intensified.