Events:
According to the 2019 performance forecast, the company expects to achieve a net profit of 801 million yuan to 942 million yuan in 2019, an increase of 3601.77% to 4252.61% over the same period last year. Among them, the net profit of 413 million yuan to 554 million yuan is expected to be realized in the fourth quarter of 2019. Thanks to the outbreak of the ETC industry, the company's revenue and net profit are expected to grow significantly in 2019.
Investment Summary:
In 2019, the construction and issuance of the ETC industry completed the target, and the performance of the industrial chain ushered in a big explosion. In the context of the complete abolition of highway provincial toll stations, the car-end and road-end business of the ETC industry has ushered in a substantial growth. According to statistics from the Ministry of Communications, by December 18, 2019, the total number of ETC customers nationwide had reached 192 million, completing 100.72% of the total issuance target, and exceeding the task of promoting and issuing ETC. The construction of 24600 ETC gantry systems and 482,000 ETC lanes in 29 provinces with networked toll collection had been completed by the end of October. Companies such as Jinyi Technology as the representative of the ETC industry chain related companies are expected to usher in ultra-rapid growth in 2019.
Dig deep into the application potential of ETC technology and enrich the technology reserve is expected to usher in a continuous harvest. The company has been ploughing the field of expressway intelligent transportation and urban intelligent transportation for many years, taking expressway ETC as a starting point to dig the development potential of intelligent integration of ETC terminals, intelligent parking and vehicle-road coordination. Under the background that the ETC market is close to the ceiling and the importance of the stock market is increasing, we are optimistic that Jinyi Technology will achieve a breakthrough in the direction of ETC front installation and smart parking:
ETC preloading: with the full coverage of ETC and the implementation of related policies, ETC loading has become a rigid demand of users, and pre-loading and pre-loading are expected to become the consensus of the mainframe factory. From the product form, the ETC terminal product function from a single road toll payment is expected to integrate driving records, traffic broadcast, rearview mirror and other functions to form a stable source of new customers.
Smart parking: the early pilot application of intelligent parking toll system based on ETC is experienced, and the solution is mature. ETC is expected to be the first to expand to the parking payment field in the application scenario, forming an important industry application of ETC.
2020 will become a key window for the car networking industry, and core equipment vendors are expected to benefit deeply. We believe that all links of the vehicle networking industry chain are basically mature, and the technical level is expected to break out after the freeze of the 5G R16 standard. In order to consolidate the characteristics and advantages of our country in the two levels of traffic power and 5G leadership, to deal with the challenges brought by vehicle networking as a cross-industry, the competent authorities are expected to promote the all-round development of the automotive networking industry chain with a more positive attitude. Jinyi Technology, as a first-class equipment and solution provider in China, has implemented benchmarking projects such as "Shenzhen Futian Free Trade Zone Intelligent driving bus demonstration Base" and "Guangzhou 5G operating vehicle self-driving and Road Cooperative demonstration Zone Construction Project". With a relatively complete product range and strong design and implementation capabilities, it is expected to benefit deeply from the construction tide of the V2X industry in the future.
Profit forecast and investment advice: we believe that the company is a leading manufacturer and solution provider of car networking equipment in China, and has achieved rich returns through deep ploughing in the ETC industry. We are optimistic that the company will continue to tap the application potential of ETC technology in the future, and the forward-looking layout of V2X technology and products will usher in new gains. From 2019 to 2021, we expect the company to achieve operating income of 4.850 million yuan and net profit of 8.73 billion yuan, corresponding to PE10x/15x/19x, covering for the first time and giving an overweight rating.
Risk tips: the market share of vehicle networking business is lower than expected; the progress of research and development is not as expected; product prices fluctuate.