Events: on August 26, the company released the 2020 China report, with total revenue of 75.4028 million yuan during the reporting period, an increase of 1.23% over the same period last year, a net profit of 25.2886 million yuan, an increase of 190.82%, and a deduction of 17.6486 million yuan for non-net profit, an increase of 20.74% over the same period last year.
The performance grew steadily in the first half of the year, and the firmware business revenue doubled. The company's 2020H1 achieved a total revenue of 75.4028 million yuan, an increase of 1.23% over the same period last year, of which firmware business revenue was 45.0642 million yuan, an increase of 106.11% over the same period last year, due to the improvement of the technical capability of the company's products and the growth of customer demand. Cloud service business revenue of 28.8352 million yuan, down 43.16% from the same period last year, due to customer bidding, project delivery and acceptance delay.
The deduction of non-net profit reached 17.6486 million yuan, an increase of 20.74% over the same period last year, showing a certain anti-cyclical ability under the influence of the macro environment.
During this period, the expenditure rate remained stable, and R & D investment continued to increase. During the period of the company, the expense rate remained stable, with the sales expense rate of 3.34%, an increase of 0.42 pct over the same period last year; the management expense rate of 12.82%, a decrease of 8.66pct over the same period last year, and an increase of 1.44 pct after deducting 19 years of equity incentive fees; and the financial expense rate was-1.18%, a decrease of 1.72pct over the same period last year. The company's R & D investment reached 15.67 million yuan, an increase of 25.88% over the same period last year, and the R & D expenditure rate was 20.79%, an increase of 4.07pct over the same period last year. Cost-cutting R & D and open source, the company's core business market competitiveness continues to improve.
Core technical capabilities continue to improve, and the driving force for follow-up development is sufficient. The company developed a graphical BIOS setup engine to provide efficient visualization solution for server firmware deployment; introduced development concepts such as DevOps and CI/CD to improve product quality in an all-round way; real-time BIOS technology supports Internet of things and industrial control applications with high real-time requirements under the X86 platform, and product competitiveness continues to improve. The company's PaaS platform improves the response speed of users' needs and makes a breakthrough in the service solutions of government and enterprises in the park, township and township. The competitiveness of firmware business is further enhanced, cloud services business is expected to return to the growth track with the resumption of work and production, and the company's performance has sufficient momentum for follow-up development.
Profit forecast and investment advice: the company's net profit from 2020 to 2022 is expected to be 0.88,1.50 and 215 million yuan respectively, maintaining a "prudent overweight" rating.
Risk hint: insufficient investment in government and enterprise cloud services; Xinchuang's landing is not as expected; Intel stops cooperation authorization.