Net profit increased sharply compared with the same period last year. According to the company's quarterly report for 2020, Q1 achieved 151 million yuan in revenue, an increase of 28.98 percent over the same period last year, and a net profit of 81.31 million yuan, an increase of 606.53 percent over the same period last year.
Profitability improved significantly and cash flow improved compared with the same period last year. 1) on the cost side, the gross profit margin increased by 25.09pct over the same period last year. 2) in terms of expenses, management expenses increased by 76.16% over the same period last year, and R & D expenses increased by 58.56% compared with the same period last year. 3) in terms of cash flow, the net operating cash flow increased by 75.32% over the same period last year.
ETC RSU relay has become an important performance-driven engine. ETC business continues to grow by leaps and bounds, with revenue growing by more than 70% over the same period last year. With reference to the sharp rise in gross profit margin, we expect the share of ETC RSU revenue in its medium and high gross margin to increase significantly, which is also an important driver of the company's relay growth this year. In addition, the announcement disclosed that the software tax rebate also contributed to the performance of Q1.
Short-term, medium-and long-term investment logic. 1) in the short term, following the outbreak of the ETC OBU market last year, the RSU business will contribute significant performance in 2020. 2) in the medium term, we are optimistic about the company's post-ETC application market, represented by urban parking and other fields. In addition, after the Wuxi 312 accident, the national out-of-limit control is strict, and the weighing business is expected to achieve high growth. 3) in the long run, the 5G V2X vehicle networking relay has a broad market space, and the company is leading in the layout of C-V2X intelligent network connection base station and lidar, aiming at hundreds of billions of markets.
Investment suggestion: the company's income from 2020 to 2021 is expected to be 5.789 billion yuan and 7.294 billion yuan respectively, and its net profit is 1.043 billion yuan and 1.431 billion yuan respectively, corresponding to EPS 9.48 yuan and 13.01 yuan respectively, corresponding to PE 8 times and 6 times respectively, maintaining the "Buy-A" investment rating.
Risk hints: uncertainty of 5G-V2X technical solutions and applications; high collaborative complexity of the industrial chain; pressure on the supply of the industrial chain caused by the outbreak of demand; and intensified market competition.
