Core ideas:
1) the performance increased steadily in 2019 and the Q1 performance in 2020 was under pressure. In 2019, the company achieved an operating income of 706 million yuan, an increase of 17.6% over the same period last year, and a net profit of 122 million yuan, an increase of 12.9% over the same period last year. 2020Q1 achieved an operating income of 45 million yuan in a single quarter, down 67.31% from the same period last year, and its net profit was-13 million yuan, a decrease of 23 million yuan compared with the same period last year. It is mainly due to the impact of COVID-19 's epidemic situation, the greater pressure on customers of government agencies downstream of the company to prevent and control the epidemic, and the delay in orders.
2) downstream customers return to work in an orderly manner, and the company's orders pick up. The downstream customers of the company are mainly government agencies such as public security and transportation departments, which are greatly affected by COVID-19 's epidemic situation and are in the anti-epidemic stage from January to February. According to the relevant bidding network data, since March, the company's orders have gradually returned to normal, intelligent transportation, livelihood policing and other areas have won the bid one after another, including the Shenzhen bus equipment renovation project with an amount of 12 million yuan. We believe that the current domestic epidemic has basically entered the final stage, the resumption of work and production in various industries has been carried out steadily, the company's orders have picked up significantly, and there is a high probability that the performance will be greatly improved in the second quarter.
3) the "smart code" system landed and walked out of the first step of online digital identity management. The company continues to promote the layout of online digital identity business, and the "digital identity" cooperation project with Tencent has been continuously promoted over the past 19 years, and has been successfully operated in many regions of the country. Q1 in 2020, the company's smart code system has been applied in ports, parks and local governments. We believe that trusted digital identity is an important foundation of the digital economy. The company has been engaged in identity identification for many years and has broad prospects for future development.
4) maintain the "overweight" rating. It is estimated that the EPS of the company from 2020 to 2022 is 1.03 yuan / 1.26 yuan / 1.55 yuan respectively, and the corresponding price-to-earnings ratio is 23 times / 19 times / 16 times. In the short term, the company's performance is under pressure in the first quarter due to the epidemic, orders have picked up obviously since March, and the second-quarter performance is expected to improve significantly, and the valuation is currently low. In the long run, the company has been ploughing identity recognition for many years and has a deep accumulation of technology. it is expected to move from offline to online in the future, with great potential for development. Maintain the "overweight" rating.
5) risk hint: the global epidemic continues to worsen, and technological research and development is not as expected.
