Event

On the afternoon of November 29, 2019, the political Bureau of the CPC Central Committee held the 19th collective study on China's emergency management system and capacity-building. General Secretary Xi stressed the need to give full play to the characteristics and advantages of China's emergency management system and actively promote the modernization of China's emergency management system and capabilities.

Brief comment

The political Bureau of the CPC Central Committee conducts collective study on emergency management and actively promotes the modernization of China's emergency management system and capabilities. On the afternoon of November 29, 2019, the political Bureau of the CPC Central Committee held the 19th collective study on China's emergency management system and capacity-building. General Secretary Xi stressed the need to give full play to the characteristics and advantages of China's emergency management system and actively promote the modernization of China's emergency management system and capabilities. This learning conference has the following points to pay attention to:

First, the basic national conditions determine that emergency management construction is both urgent and long-term. China is one of the countries with the most serious natural disasters in the world, which is the basic national conditions of our country. Strengthening emergency management system and capacity building is not only an urgent task, but also a long-term task. This shows that the growth rate of China's emergency management market is expected to accelerate and there is also more room for development in the future.

In 2018, the market size of China's emergency platform industry reached 9.09 billion yuan, an increase of 45.9% over the same period last year, and will continue to maintain a high growth rate in the future.

Second, party committees and governments at all levels should strictly implement the responsibility system. Party committees and governments at all levels should earnestly shoulder the political responsibility of "promoting the development of one party and ensuring the safety of the other," and establish and improve the investigation and evaluation system of major natural disasters and safety accidents, which cause losses or significant social impact on dereliction of duty, the parties shall be investigated for responsibility in accordance with discipline and law. This shows that urban safety will be included in the assessment of officials, and local governments will have more motivation to promote the construction of emergency safety platform and urban lifeline.

Third, omni-directional, 24-hour emergency duty has extremely high requirements for urban emergency management. The meeting pointed out that emergency management departments are on emergency duty 24 hours a day, 365 days a year, and may face extreme situations and life-and-death tests at any time. And omni-directional, 24 hours to cover every corner of the city, emergency management construction, technical requirements are extremely high, so the future demand for high-quality emergency management construction is greater.

The company is the leader of domestic emergency management software, and it is expected to usher in the peak period of provincial and municipal emergency management platform construction in the next two years. The Emergency Management Department was established in March 2018. It is composed of emergency management, fire control, disaster relief, geological disasters, flood control and drought relief, fire prevention, earthquake relief and disaster relief departments of the State Administration of Safety, the General Office of the State Council, the Ministry of Public Security, the Fire Bureau, the Ministry of Civil Affairs and other ministries. At present, the emergency management department has a large number of people, at the same time, it has been established for a short time, and the relevant investment also maintains a high proportion. It is expected that the next year and the year after next will be the peak of emergency platform construction in various provinces. Chenan Technology is the absolute leader in the domestic emergency platform software market, with a market share of 70%, and is expected to fully benefit from the construction of the emergency management platform.

The company's urban lifeline, fire safety and other businesses are also expected to benefit from increased investment in the domestic emergency management market. The company's urban lifeline business can conduct large-scale monitoring of the city 24 hours a day, and has successfully warned 3780 cases of bridge structural health and safety incidents and 472 alarms of excessive biogas concentration caused by overloading of heavy vehicles in Hefei, effectively preventing gas explosion in urban underground pipe network and safety accidents of bridge traffic facilities operation, and has landed in Xuzhou, Jiangxia, Huaibei and Foshan. The company's fire safety business includes traditional fire control, intelligent fire control and fire cloud services, in which fire cloud services are provided by the subsidiary Chenan Cloud Service, which can provide one-stop fire safety cloud services to social units to monitor the building, which can effectively prevent fire. The charging mode is annual service fee, which is currently connected to 6000-7000 million square meters. From 2011 to 2018, the area of newly started commercial housing is more than 200 million square meters, and the stock space is huge. In the area of industrial safety, profit forecasts and investment ratings:

The study of the Central political Bureau on emergency management system and capacity building shows that the government attaches great importance to urban safety. After urban safety is included in local assessment in the future, local governments will have more motivation to promote the construction of emergency safety platform and urban lifeline. The company is the leader of domestic emergency management software, and the city lifeline business is the only company that has landed in many cities. It is expected that the company's revenue will maintain rapid growth. It is estimated that the company's net profit from 2019 to 2021 will be 2.05,2.90 and 398 million yuan respectively, and the corresponding EPS for 19 to 20 years will be 0.88,1.25,1.71 yuan respectively, and the corresponding share price PE will be 47, 33 and 24 times respectively, maintaining the buy rating.

Risk hint: the confirmed revenue of overseas orders is not as expected; the urban lifeline project of Hefei is not as expected; and the landing of other cities is slow.