Overview of events
The company issued a pre-announcement of its 2020 semi-annual results on July 14, which is expected to realize a net profit of 18.75 million yuan to 12.5 million yuan, down 77.6% and 85.1% over the same period last year.
The epidemic is gradually controllable, Q2 month-on-month improvement to achieve overall turnaround COVID-19 epidemic affects the company's Q1 enterprise SMS and financial services outsourcing business, as the epidemic is gradually under control, business activities resume, Q2 demand data improves, and subsidiaries return to profits. Q2 is expected to achieve a net profit of 41.518 million yuan to 35.268 million yuan, an increase of 33.2% to 13.2% over the same period last year.
Increase innovative research and development in the three major business areas, and actively layout enterprise short messages in the field of information transmission: 5G messages based on RCS technology upgrade the SMS channels of SMS manufacturers and raise the ceiling of the industry as a whole. In the new round of competition, in addition to their own customers and channel advantages, the reserve of RCS message templates based on different industries and new technology products is also an important key to compete in the new market.
Base station operation and maintenance: the company strengthens research and development on the upgrading of operation and maintenance business brought about by 5G network construction, and realizes the intelligent management of 5G base station through a series of development such as network intelligent maintenance platform, from network maintenance to site operation, and realizes vertical expansion of business.
Financial services outsourcing: considering the potential impact of the epidemic in the future, the company increases its R & D investment in the field of artificial intelligence in terms of intelligent agents. Combined with RCS Chatbot applications, it can realize the extension of intelligent customer service and RCS technology.
5G has brought market expansion, and the company has ushered in a new wave of development opportunities. 5G network construction has brought both the expansion of communications services and enterprise short message markets. in the field of full market competition, the company has long-term operator cooperation and financial advantages. early layout is expected to help the company enhance competitiveness and expand market share.
Investment suggestion
With the gradual recovery of the epidemic, the new business ushered in the opportunity of market expansion. It is estimated that the company's performance in 20-21 will be adjusted from 230 million yuan and 270 million yuan to 220 million yuan and 270 million yuan, and its 22-year performance is expected to be 340 million yuan, corresponding to the current price PE of 34X/28X/22X, respectively, maintaining the "overweight" rating.
Risk hint
The competition in the network maintenance business continues to be fierce and gross margins are lower; the epidemic may continue to bring uncertain effects; and customer growth and gross margins in corporate text messages and financial services are lower than expected.
