Event

On May 23, the company issued a pre-plan for the non-public offering of A-shares: in 2019, the company realized operating income of 6.226 billion yuan, down 0.67 percent from the same period last year, and realized net profit of 37 million yuan, an increase of 165.57 percent over the same period last year. In the first quarter of 2020, the company realized operating income of 679 million yuan, down 38.77 percent from the same period last year, and realized net profit of-45 million yuan, down 275.48 from the same period last year.

Brief comment

On May 23, the company issued a pre-plan for the non-public offering of A-shares. The total amount of funds raised in this non-public offering does not exceed 1.6 billion yuan. It is used for the company's 5G related industrialization projects, ubiquitous intelligent public safety network equipment research and development, information technology service base construction and other projects, which can promote the company to seize the 5G commercial opportunities and enhance the company's core competitiveness in public safety communications, intelligent manufacturing and other fields. At the same time, when the current business is in a large-scale investment period, the financial pressure can be alleviated to a certain extent.

In 2019, the company realized operating income of 6.226 billion yuan, down 0.67% from the same period last year, and realized a net profit of 37 million yuan, an increase of 165.57% over the same period last year. Of this total, the business income of communications network systems was 2.338 billion yuan, up 0.92 percent from the same period last year; the revenue from communications network services was 1.733 billion yuan, down 26.6 percent from the same period last year; the revenue from intelligent applications was 1.2 billion yuan, up 68.26 percent from the same period last year; and the revenue from high-end equipment manufacturing was 955 million yuan, up 8.89 percent from the same period last year. The gross profit margin of the company's sales in 2019 was 18.04%, an increase of 2.87 percentage points over the same period of the previous year, and the expense rate during the period was 14.21%, an increase of 1.97% over the same period last year.

The first 5G planning project undertaken by the company has been completed, and the ICT service has been successfully shortlisted in the multi-provincial operator market. The company continued to stabilize its position as the largest third-party design institute in China in the telecom operator market, and was shortlisted as the ICT partner of more than 10 provincial operators and Guangxi ASEAN data Port, winning the bid for China Mobile Limited collection project; opening up the business field of ubiquitous power Internet of things planning and design, and undertaking the design of State Grid's 5G pilot network in Zhangjiakou and other places. In terms of high-reliability PCB models, taking orders to maintain a good growth momentum, maintain a leading level in the market segment, special printed circuit board business continues to maintain a rapid growth trend, orders reached 550 million yuan, an increase of 18% over the same period last year.

It ranks first in China in the rail transit special network communication system industry. The company's communication network system business has achieved the performance of 12 metro communication system integration, and the number and amount of bids won are all first in the industry; 34 public college telephone system projects and 21 special wireless system projects have been won, all of which maintain the first market share, and the independent product TETRA digital trunking system has won the bid for 6 lines. The application business of the intelligent industry focuses on the water and gas industries, develops independent products around the core technology, develops new markets, enters the Shanxi intelligent water market, and undertakes the equipment (automatic control system) procurement project of the second phase of Shanxi Huyan Waterworks.

In the first quarter of 2020, the company achieved operating income of 679 million yuan, down 38.77% from the same period last year, and realized net profit of-45 million yuan, down 275.48% from the same period last year. During the reporting period, the company's orders increased by 10.47% compared with the same period last year, but due to the impact of the novel coronavirus epidemic, the settlement of revenue was delayed and the business income was confirmed to be reduced. At the same time, it was difficult for the company's fixed costs to decline during the epidemic period. Material costs, logistics costs, labor costs and epidemic prevention costs have all increased, resulting in a sharp drop in profits compared with the same period last year.

The follow-up capital operation of CLP Communication Sub-Group is highly predictable.

On September 8, 2017, CLP Communications Sub-Group completed its registration as an one-person limited liability company wholly owned by China Electric Power Co., Ltd., which is managed according to the second-level member unit. Under the jurisdiction of China Electric Power Co., Ltd., seven, 34, 39, 50 and 54 companies, CLP Communications Co., Ltd. co-ordinates the integration and reorganization of relevant business assets and resources of the Communications Division, and undertakes the follow-up work of business reform. Jesse Technology, as the listing platform for the future capital operation of CLP, will promote the securitization of military assets in accordance with the national policy on the reform of military research institutes and the group strategy.

According to the official website of 54 CLP, the operating goal of CLP Communications Sub-Group in 2018 is to achieve operating income of 20.757 billion yuan, an increase of 4.3% over the same period last year, and total profits of 1.546 billion yuan, an increase of 19.38% over the same period last year. The volume of the CLP Communication Sub-Group is several times that of the listed companies. Jessai Technology, as the only capital operation platform of CLP Communications, is highly predictable for the injection of high-quality assets.

Profit forecast and investment rating: performance resumes steady growth, CLP's capital operation is worth looking forward to, maintaining the holding and rating company is one of the domestic qualified information network construction service providers, and the main business is expected to grow continuously and steadily; as the only capital operation platform of CLP, the injection of high-quality research resources is highly expected. It is estimated that the company's net profit from 2020 to 2022 will be 0.50,1.62 and 221 million yuan respectively, an increase of 34.71%, 225.78% and 35.87% respectively over the same period last year. The corresponding EPS for 20 to 22 years will be 0.09,0.28,0.39 yuan respectively, and the corresponding share price PE will be 152,57,34 times respectively.