occurrences
The company released its 2020 semi-annual report. It achieved operating income of 367 million yuan in the first half of the year, an increase of 17.12% over the previous year; net profit attributable to shareholders of listed companies was 34.4014 million yuan, a decrease of 32.19% over the previous year; basic earnings per share were 0.33 yuan/share, a decrease of 32.91% over the previous year.
reviews
Revenue increased in the first half of the year, and Q2 profits showed a downward trend. The company achieved a 17.12% year-on-year increase in operating income in the first half of the year, and net profit attributable to shareholders of listed companies decreased by 32.19% year-on-year; gross margin and net interest rate were 25.63% and 9.35% respectively. Q2 achieved operating income of 149 million yuan in a single quarter, a decrease of 17.48% over the previous year and a decrease of 31.41% from the previous quarter; net profit attributable to shareholders of listed companies was 4,3036 million yuan, a decrease of 83.88% over the previous year and a decrease of 85.53% from the previous quarter. The reason for the decline in company profits is 1) the increase in basic platform software and system software costs for the Greenway System Integration Project (July 2019) was higher than revenue growth, and the gross margin of the project was lower than that of other businesses; 2) the increase in the company's R&D expenses and financial expenses during project construction; 3) the epidemic also affected the progress of project work. The decline in the company's operating cash flow was due to 1) some projects were under construction, and there was a net outflow of cash flow; 2) the increase in payment payments in the first half of the year compared to the same period last year.
Won the bid for a new smart street light project to build a smart street light ecosystem. The company is a road lighting enterprise located southwest to the whole country, integrating 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 is one of the leading companies in laying out the smart street light market. It has cooperated with Huawei, Inspur Group, and Chengdu Branch of China Tower. It sold 8,999 sets of smart street lights (+292.46%) in 2019, achieving revenue of 954.404 million yuan (+102.22%), with a clear first-mover advantage. Currently, the company is steadily advancing the smart street light project. On July 7, 2020, a consortium formed by the company and Meishan Huantian Intelligence, a participating subsidiary, won the bid for a smart street light public procurement project with a bid amount of 160 million yuan. The project purchased 4,557 sets of multi-pole integrated smart street lights, with a delivery period of 150 days.
5G capital expenditure increased in 2020, opening up the smart street light market space. The capital expenditure plans of the three major operators in 2020 reached 334.8 billion yuan, an increase of 12% over last year. Among them, the 5G capital expenditure plan reached 18.3 billion yuan, accounting for 54% of the total capital expenditure plan, an increase of 3.38 times over last year. After the epidemic abated, the construction of 5G base stations by various local governments also accelerated further. The ultra-dense networking of 5G microbase stations has accelerated the release of demand for smart light poles. According to the International Smart City Research Center's forecast, in 2020, the market space for smart street lights driven by 5G base station construction will be 117.6 billion yuan. By 2021, the market size of various hardware and services using smart street lights as entry points will reach 3.7 trillion yuan, accounting for 20% of the smart city market.
Profit forecast: We expect the company's operating income in 2020-2022 to be 1,032, 1,434 and 1,786 billion yuan respectively; net profit attributable to shareholders of listed companies is 133, 215, and 314 million yuan respectively. EPS is 0.93, 1.50, and 2.20 yuan/share, and the corresponding PE is 25, 16, 11 times, and continues to be rated as “increase in holdings”.
