Events:
On August 25, 2020, the company released the semi-annual report of 2020. During the reporting period, the company realized revenue of 367 million yuan (+ 17.12%), net profit of 34.0413 million yuan (- 32.19%), and non-return net profit of 33.3088 million yuan (- 33.17%). Among them, 2020Q2 achieved revenue of 149 million yuan (- 17.48%), net profit of 4.3036 million yuan (- 83.88%), and non-return net profit of 3.5542 million yuan (- 86.65%).
Comments:
1. As the best 5G site supplement and smart city data entry, the industry boom continued to improve, and the company's revenue grew: during the reporting period, due to the influence of COVID-19 's epidemic situation, the economic situation at home and abroad was relatively grim, and the economic downward pressure continued to increase. the company's project acceptance, implementation, delivery, acceptance and other related work progress are affected by the epidemic. Market demand declined during the epidemic, but as the state vigorously promoted the construction of new infrastructure in the iconic fields of 5G, big data Center and Industrial Internet, as well as the key support for "two new and one heavy", the pace of transformation and upgrading of urban road construction has been accelerated, and the demand for intelligent lighting market has increased steadily. In addition, the smart lamp post can be attached to 5G small micro base stations, which is the best site to supplement resources in the city; the smart lamp post is also the data portal of the smart city, and the acceleration of smart city construction will drive the growing demand for smart lamp posts. In the first half of 2020, the company realized operating income of 367 million yuan, an increase of 17.12% over the same period last year, of which 2020Q2 realized revenue of 149 million yuan, down 17.48% from the same period last year and 31.34% from the previous year. The revenue growth in the first half of the year was mainly due to the increase in revenue from the basic platform software and system software of the Greenway system integration project. In June 2019, the company, together with Tencent Cloud and Donghua Software, won the 874 million yuan wisdom greenway project in Chengdu Jincheng Greenway. In the construction and operation of intelligent greenway, the company's intelligent lamppost is used as the front-end intelligent hardware of the Internet of things, equipped with intelligent monitoring, multimedia distribution, wireless AP, one-button alarm, 5G micro base station and other functions to transmit information to a unified big data central platform for control, management and linkage. Realize the application of new Greenway scenarios such as intelligent business district, intelligent security, energy saving and environmental protection, smart tourism, behavior insight, portrait recognition, 5G micro base station service, etc.
The company has a good level of operation and management, and the expense rate during the period shows a downward trend: during the reporting period, the sales expense rate was 4.04%, down 1.14% from the same period last year; the management expense rate was 9.01%, down 0.2% from the same period last year; the financial expense rate was 0.28%, up 0.34% from the same period last year; the total period expense rate was 13.32%, down 1.01% from the same period last year. The sales expense rate of 2020Q2 was 4.84%, up 0.31% from the same period last year; the management expense rate was 6.15%, up 0.71% from the same period last year; the financial expense rate was 0.79%, up 0.47% from the same period last year; and the total period expense rate was 11.79%, up 1.49% from the same period last year. The decrease in the company's sales expenses in the first half of the year is mainly due to the decrease in the salary, travel expenses and design expenses of the company's staff and workers compared with the same period last year. The decrease in management expenses is mainly due to the decrease in the salary of the staff and workers and the provision of safety production expenses compared with the same period last year.
The increase in financial expenses is mainly due to the increase in interest expenses of the company over the same period last year. The decline of the company's sales and management expenses has led to a decline in the overall expense rate compared with the same period last year, and cost-side control is more effective.
Affected by the epidemic and new projects, the company's gross profit and net profit decreased during the reporting period: in the first half of 2020, the company's net profit was 34.0413 million yuan, down 32.19% from the same period last year; and 33.3088 million yuan, down 33.17% from the same period last year. 2020Q2 achieved a net profit of 4.3036 million yuan, a decrease of 83.88% over the same period last year, and a non-return net profit of 3.5542 million yuan, a decrease of 86.65% over the same period last year. The gross profit margin was 25.63%, down 13.48% from the same period last year. The decline in the company's gross profit margin in the first half of the year was mainly due to the increase in the cost corresponding to the increase in revenue from the basic platform software and system software of the company's Greenway system integration project and the lower gross profit margin of this project than other businesses, as well as the increase in research and development expenses and financial expenses of the company. The company's net interest rate was 9.35%, down 6.67% from the same period last year; of which 2020Q2 net interest rate was 2.84%, down 11.9% from the same period last year. During the first half of the year, the expense rate decreased compared with the same period last year, and the decline in net interest rate was slightly smaller than that in gross margin.
two。 In recent years, the company has focused on technological research and development and manufacturing in the field of intelligent street lamps, with increasing R & D expenses and R & D investment to promote in-depth development and product innovation: the company increased R & D investment during the reporting period, with R & D expenditure of 14.746 million yuan, an increase of 66.79% over the same period last year, accounting for 4.02% of the total revenue. Since 2019, the company has continued to maintain its technological advantages in lighting, and has continued to invest heavily in the development of multi-function smart lamp poles, multi-function smart lamp pole operation and management software platform, smart lamp pole edge computing gateway, and new smart city scene service system; in 2020, the company has made certain achievements in intelligent parking system, including operation management platform, operation and maintenance management platform, client Mini Program and PDA parking management software. The company and the University of Electronic Science and Technology jointly developed the new scene application of intelligent street lamp, focusing on artificial intelligence, image recognition, machine vision, AIOT and other technical fields, and developed and completed urban intelligent parking system, intelligent city management image recognition system and other products, which have been successfully applied in a number of smart street lamp projects, and the added value and scientific and technological content of the products have been further improved. The company's core competitiveness in the field of smart lamp pole operation continues to be maintained. As of June 30, 2020, the company has obtained a total of 475 patents (42 new patents in the reporting period), including 84 invention patents, 84 utility model patents (9 new patents in the reporting period), 383 design patents (33 new patents in the reporting period) and 15 software copyrights (1 new in the reporting period).
Thanks to the continuous expansion of R & D investment, the company's product line continues to be rich and diverse to meet the personalized needs of different customers.
3. The outdoor lighting leader of the whole industry chain, the first-mover advantage layout smart lamp pole, the business expansion is expected in the future: the company is one of the largest urban lighting integrated service providers in China, the first-mover advantage layout wisdom lamp pole, the whole industry chain layout, including scheme planning and design, street lamps, lamp poles and integration, as well as project implementation and other links. And expand the smart city business from two aspects: "smart street lamp hardware" + "smart city software platform".
During the reporting period, the company funded the establishment of Meishan Huantian Wisdom Technology Co., Ltd on April 24, 2020, with a contribution ratio of 30%. The largest shareholder is Meishan Huantian Culture Communication Co., Ltd., with a shareholding ratio of 70%. The company is 100% indirectly owned by Meishan State-owned assets Supervision and Management fee Garden. On July 6, 2020, the consortium of the company and Meishan Huantian Wisdom was identified as the winning bidder for the open procurement project of Wisdom Street Lamps in Meishan Tianfu New District, with a winning bid amount of 160 million yuan and 4557 sets of multi-pole all-in-one Wisdom Street Lamps. And according to a notice issued by the Management Committee of Meishan Tianfu New District on March 4, 2020, this tender is the first phase and will be built in Shigao area, with an investment of about 43 million yuan for intelligent equipment. After the first phase is implemented and improved, it will be gradually extended to Meishan Tianfu New area, with a total investment of 640 million sets of multi-functional smart street lamps, with a total investment of about 500 million yuan. The company's business orders are guaranteed to a certain extent, and the business expansion can be expected in the future.
4. The southwest market is stable, and the company breaks through other domestic markets with the new mode of "industry + capital + project". The company is headquartered in Chengdu, Sichuan, so the southwest has the highest market share. In addition to the 160 million yuan in Meishan this year, Sichuan Province's revenue accounted for 56.32% of the total revenue Prida in 2019; and according to the company's website, a total of 14 projects in southwest China landed, more than half of the cases on the company's official website. As the southwest market is stable, the company is gradually opening up other domestic markets. According to the company's website, the first wisdom road project in Yingtan, Jiangxi Province was added during the reporting period, and two new cases were added in July this year, namely, Fuzhou Central and Western Cultural Street and Wuhan "Yangluo Heart" project. On July 29, 2020, the Management Committee of Bengbu High-tech Industrial Development Zone signed an investment agreement and project cooperation agreement with Guoxin Huayang, Bengbu City Investment Holdings Co., Ltd., and Huatian Science and Technology. According to the investment agreement, Guoxin Huayang, Bengbu City Investment, China Sports Science and Technology will jointly set up a 5G multi-pole intelligent street lamp R & D and production base in Bengbu High-tech Zone. According to the project cooperation agreement, under the premise of complying with the provisions of laws and policies, it is included in the new construction and renovation project of 40,000 sets of 5G multi-pole intelligent street lamps involving 3.9 billion yuan in the large-scale construction plan of Bengbu City. under the same conditions, priority should be given to the products of industrial joint ventures. Compared with the traditional model, the new mode of "industry + capital + project" reduces the financial pressure on the construction of intelligent street lamp enterprises, at the same time, it can comprehensively absorb multi-resources, project cooperation has more competitive advantages, and promote the transformation and upgrading of smart lamp pole industry.
5. Profit forecast and investment advice:
We estimate that the company's revenue will be 11.106 Universe 21.38 / 2.774 billion yuan in 2020-2022, and its net profit will be 1.43 Universe 298 million, eps 1.40 2.92 Plus 3.80, corresponding to pe 21.9910.58 8.12 times. Considering the high growth rate of the company's future performance, maintain the company's "highly recommended" rating.
6. Risk tips: the impact of COVID-19 's epidemic situation; the progress of the smart street lamp project is not as expected; the company's market share is not up to expectations.
