A lighting leader in the southwest region, with the ability to serve the whole industry. Huati Technology is a road lighting enterprise located southwest to the whole country. It integrates business such as plan planning and design, product development and manufacturing, project implementation, operation, management and maintenance services, and has service capabilities for the whole industry. The company's revenue is growing steadily, and its profitability is at an upstream level in the lighting industry. In 2019, revenue increased sharply by 35.21%. In 2020, the company achieved revenue of 217 million yuan (+64.39%), and net profit attributable to shareholders of listed companies was 297.378 million yuan (+26.54%).
5G leads new infrastructure, and smart street lights open up market space. In April 2020, the National Development and Reform Commission clarified the scope of new infrastructure for the first time. New infrastructure began to enter a hot layout period, and 5G construction led the development. Urban lighting projects are part of urban infrastructure. As infrastructure investment picks up and the urbanization process accelerates, it will drive the development of the urban lighting industry. As the “new infrastructure” of smart cities, smart pole towers carry a variety of devices and sensors, and are high-quality carriers for 5G base stations. The ultra-dense networking of 5G microbase stations is driving the release of demand at an accelerated pace. According to the forecast of the International Smart City Research Center, the smart street light market space driven by 5G base station construction will be about 117.6 billion yuan in 2020.
Take the lead in arranging multi-party cooperation to build a smart street lighting ecosystem. The company combines traditional street lights with technology to take the lead in laying out the smart street light market. In 2016, the company and the University of Electronics and Science and Technology established the Smart Street Light and Smart City Laboratory. In 2018, he joined the Huawei eLTE Ecological Alliance to jointly build an IoT ecosystem; cooperated with Inspur Group and China Tower Chengdu Branch to speed up the installation and implementation of 5G base stations and promote smart city construction. In 2018, the company launched a smart street light business. In 2019, the company sold 8,999 sets of smart street lights (+292.46%) and achieved revenue of 954.404 million yuan (+102.22%). The first-mover advantage is obvious. Up to now, the company has won bids for 4 smart street lighting projects, with a total bid amount of about 1,893 billion yuan.
The lighting business grew steadily and expanded from the southwest to the whole country. The company's traditional lighting business is growing steadily and is highly recognized for its high-quality product design and manufacturing, perfect industrial chain services, and unique business model. Driven by increased infrastructure investment and the urbanization process, China's road lighting market is expected to have a new market of 22.2 billion yuan in 2020. The company is based in the southwest, expanded to the whole country, actively lays out business outside the province, and has established 20 marketing outlets across the country. In 2019, the company's internal and external revenue in Sichuan Province accounted for 56.76% and 43.24% respectively.
Profit forecast: We expect the company's revenue to be 1,128, 1,649, and 2,064 million yuan respectively in 2020-2022; net profit attributable to shareholders of listed companies is 174 million, 276 million yuan, and 376 million yuan respectively. EPS was 1.71, 2.70, and 3.68 yuan/share, and the corresponding PE was 25, 16, 11 times. For the first time, the “increase in holdings” rating was covered.
Risk warning: 5G construction falls short of expectations, and revenue uncertainty brought about by the pandemic.
