Event: on August 25, the company released its performance report for the first half of 2020, with revenue of 505 million yuan, an increase of 41.77% over the same period last year, and non-net profit of 29.7618 million yuan, up 2062.07% from the same period last year.
Comments: the two major business sectors of "smart hardware + smart marketing" are growing together. In the first half of 2020, under the influence of the COVID-19 epidemic and Sino-US trade frictions, the company actively adjusted production capacity and the pace of resumption of work, combed and integrated various businesses, achieving revenue of 505 million, an increase of 41.77 per cent over the same period last year. During the epidemic, the company gave full play to the advantages of supply chain management accumulated over the years to ensure the normal supply demand of customers, "intelligent hardware"
The business achieved revenue of 289 million, an increase of 44.44% over the same period last year. Through the continuous adjustment of the business structure, the main business revenue of the company's digital marketing sector increased by 39.38% compared with the same period last year. The company's overall gross profit margin was 19.71%, which was basically stable compared with the same period last year.
The rate of all expenses has dropped, and the investment in R & D has increased. The company's sales expense rate was 2.97%, a decrease of 1.34% over the same period last year, mainly due to a greater reduction in employee compensation insurance; the company's management expense rate was 4.70%, a decrease of 3.85% over the same period last year, mainly due to a greater reduction in employee salary insurance and depreciation amortization items; the company's financial expense rate was-0.31%, a decrease of 0.17% compared with the same period last year, mainly due to an increase in exchange earnings. In terms of R & D investment, the company's R & D expenditure increased by 19.83% compared with the same period last year, but the R & D expenditure rate was 3.11%, down 0.57% from the same period last year. The company will increase investment in R & D and expand new categories, which will help to enhance the competitiveness of products. The company's cost management and control was optimized obviously, and the overall expense rate decreased by 5.93 percentage points compared with the same period last year. In the first half of 2020, the company achieved a non-net profit of 29.7618 million yuan, an increase of 2062.07% over the same period last year, the highest in the past five years.
Plan to take advantage of 5G and wearable market opportunities. The company acquired Yizhifei and entered the TWS industry.
The Yizhifei team has many years of experience in areas such as TWS headset design, and this acquisition is expected to become a new growth point for the company's future business. The company issued a non-public stock offering plan to raise 588 million yuan to invest in the production and research and development of artificial intelligence wearable products to match the company's layout rhythm in TWS. We are optimistic about the growth space that TWS business brings to the company, and we are optimistic that Dingzeng will help the growth of the company's related business.
Maintain a "buy" rating. Without considering the influence of fixed increase on the index, we estimate that the EPS of the company from 2020 to 2022 is 0.29,0.44,0.61 yuan respectively, and the corresponding PE is 29,19,14 times.
We are optimistic about the development potential of the company in the field of smart hardware and smart marketing, valuing the company at 35 times PE in 2020, raising the target price to 10.15 yuan and maintaining a "buy" rating.
Risk hint: the epidemic situation, Sino-US trade frictions and so on affect demand, and the progress of new business is not as expected.
