Report summary:
On July 4, 2020, the company released the 2020 semi-annual performance forecast. Net profit attributable to shareholders of listed companies: 5.5 million yuan to 8 million yuan, down from the same period last year: 56.16% to 69.86%.
A strategic transformation began in 2019 and successfully turned a loss into a profit. The acceleration in the growth rate of the big data and biomedical sectors is expected to be the driving force for sustainable performance growth in the future.
2019 was the year the company turned a loss into a profit and bottomed out. Through active strategic business adjustments, streamlining personnel to optimize the management team, and stabilizing profits and expenses, the company achieved a 19.11% increase in operating income over the same period last year; operating profit increased 102.09% over the same period last year. This year, the company overcame all kinds of disadvantages caused by operating losses for two consecutive years in 2017 and 2018, and actively stopped the declining trend in the company's performance through various optimizations and adjustments in business, personnel and management, and was ready to move forward.
According to Zhiyan Consulting, the medical big data industry is expected to maintain a growth rate of more than 60%, reaching a market size of 48.28 billion yuan by 2024. The company provides customers with overall solutions in areas such as automated analysis and interpretation of genetic data and laboratory information management (LIMS). The unique data operating system will inject new profit points into the biomedical industry, and the company is strategically skewed on the biomedical sector.
The year-on-year decline in performance in the first half of 2020 did not change the company's long-term development trend, and future expectations remained good.
Affected by the COVID-19 pandemic, the company and upstream and downstream partners in the industry chain delayed resumption of work in the first quarter, logistics were blocked, and business development was affected to a certain extent. As the epidemic was brought under control in the second quarter, the company took active measures to respond to and speed up the resumption of work and production projects, but due to the outbreak of the second wave of the epidemic in Beijing, some contracts were not delivered as scheduled, so business is expected to decline 56.16% to 69.86% year-on-year in the first half of the year. Looking at the long term, due to the control of the epidemic and the completion of the company's business focus and strategic transformation last year, it is expected that the company's performance will continue to perform well in the future, and the effects of strategic transformation will gradually become apparent.
Company profit forecast: The company is a professional information technology company with locations in cloud computing, Internet of Things and data services, biomedicine, etc. We expect the company's net profit to be 0.44/0.62/89 million yuan in 2020-2022, and the corresponding EPS is 0.07/0.09/0.13 yuan respectively. The current stock price corresponds to the 2020-2022 PE value of 98/70/49 times, respectively. Maintain a “Recommended” rating.
Risk warning: The company and upstream and downstream partners in the industry chain have delayed the resumption of work, logistics have been blocked, the progress of the resumption of work and production projects has fallen short of expectations, and the failure to complete and deliver some contracts as scheduled fell short of expectations.
