Weishijiajie's net shareholder profit in 2019 reached HK$810 million, up 9.3% year over year. Total revenue increased 6.0% year over year to HK$66,210 million, and all segments recorded positive growth. Mobile terminals/accessories/cloud computing and big data analysis/network and information security business increased 3.3%/11.8%/3.9%/10.1%, respectively. Gross margin remained flat at 4.5% year on year, operating expenses were well controlled, and the share of sales and administration in revenue fell 0.1 percentage points year over year to 2.6%. The company declared a final dividend of HK$0.167 per share, up 10% year-on-year, and maintained a 30% payout ratio.

Despite short-term fluctuations, long-term growth is promising. According to management, the company's revenue for January-January 2020 fell about 8% year-on-year to HK$9.1 billion due to the COVID-19 outbreak. However, we don't think the demand for IT equipment and services will disappear and may be delayed until the rest of the year. Furthermore, the rapid development of cloud computing, big data, and 5G will bring growth opportunities to the company.

The investment rating was maintained at “buy” but the target price was lowered to HK$4.50. The new target price is equivalent to 7.3 times/6.4 times/5.6 times the 2020/2021/2022 price-earnings ratio, respectively. Key risks include increased competition in the IT services industry and the continued spread of the coronavirus.