Reducing the burden is new, and profits are expected to pick up: the company's business system is perfect, including mobile phone distribution, lottery, mobile Internet, mobile resale, and so on. In 18 years, the company achieved 42.47 billion yuan in revenue, an increase of 7.2% over the same period last year, and achieved a net profit of-230 million yuan. The main reason why the performance was lower than expected was that the performance of lotteries and participating companies did not meet expectations, and the company made a large impairment on goodwill and financial assets. After the completion of the impairment, it is less likely to write down the impairment again, and the asset impairment is expected to return to the normal level. In addition, the company strips off its non-main business and focuses on its core business, and its profitability is expected to pick up gradually.
Huawei's deep cooperation has benefited from the 5G replacement trend: the company is the leading mobile phone distributor in China. Over the past 18 years, the company's mobile phone distribution business revenue has reached 41.2 billion yuan, an increase of 7% over the same period last year. The company maintains a good and close cooperative relationship with Apple Inc, Huawei, Samsung and other major mobile phone manufacturers. Its China brand products continue to expand in recent years, and the related cooperation accounts for an increasing proportion of the company's mobile phone distribution business. In addition, the company is the overseas agent of Huawei mobile phone, and the company's overseas business is expected to develop rapidly with the help of Huawei brand.
Strong channels, new products bring new space: the company has a sound mobile phone distribution system, offline distribution channels cover more than 80,000 stores, while ploughing the third-and fourth-tier urban markets, major distribution customers include SUNING, Gome, Dicong, etc. At the same time, the company also has Yi Tian digital self-owned stores, in cooperation with various brands to set up all kinds of offline stores In terms of online channels, the company covers 200,000 online retail stores, including the acquired Nengliang Digital Tmall flagship store, and opened a direct online platform "itell Yi Tian" to integrate B\ C customers and try to open online and offline channels. With the help of strong channel advantages, the company has gradually developed 3C consumer goods with high gross margins, such as mobile phone cases, headphones, e-cigarettes, etc., and the new product line brings new development space for the company.
The steady development of lottery business, new orders bring new growth points: the company acquired Palm Lotong at the end of the year to cut into the lottery business, gradually to the lottery industry chain layout, mainly related to hardware, software and related services.
The entry threshold for lottery business is relatively high, and the company is the only company in China that has the right to sell its own products in the field of welfare lottery and sports lottery at the same time. It has obvious competitive advantages and ranks in the top two in the welfare lottery and sports lottery market. In 19 years, the company has won the bid for Kino and video lottery, which is expected to bring new growth space.
Investment suggestion: we expect the company's net profit from 2019 to 2021 to be 1.5,1.8 and 230 million yuan respectively. For the first time, the company is given an investment rating of-B, with a 6-month target price of 7 yuan.
Risk hint: the replacement wave is not as expected, and the lottery business is not as expected.