The company's 20H1 realized operating income of 341 million yuan,-14.47% year-on-year, and net profit of 31.472 million yuan,-45.76%, compared with the same period last year. Revenue declined during the reporting period, OVS-03 satellites and Xinjiang ground stations completed acceptance and reached capacity expansion. Although short-term profits are under pressure, considering the domestic alternative space in the field of aerospace electronics and the development prospects of the company's satellite big data business, it is expected that the long-term performance is expected to increase, maintaining the "buy" rating, with a target price of 15 yuan.
H1 performance has declined, optimistic about the long-term development of the company. The company's 20H1 realized operating income of 341 million yuan,-14.47% year-on-year, and net profit of 31.472 million yuan,-45.76%, compared with the same period last year. Q2 achieved an operating income of 212 million in a single quarter, a year-on-year-0.45%, a net profit of 12.8703 million yuan, a year-on-year net profit of-63.10%, a gross profit margin of 41.03%, and an improvement in product profitability. During the reporting period, the company's overall revenue declined, and the profit margin increased by 6.21pcts to 45.04%. Due to the increased promotion efforts of the parent company Satellite big data, the promotion expenses increased, and the sales expenses increased by 130.18% compared with the previous period. Due to the increased capitalization expenditure of OAI18-I and OAI18-II chips invested by the parent company and the extension of AI camera gun and the capitalization of application software based on the new generation Internet of things intelligent monitoring platform, the company's R & D investment has increased by 249.24% compared with the beginning of the period, and the scale of Chinese-funded R & D investment is relatively large, indicating that the project may enter the industrialization stage. With the increase of the company's promotion efforts and the substantial growth of R & D investment, aerospace electronics and satellite big data business may become a support point for the company's future development.
Inventory and contract liabilities are rising, and the performance outlook is expected to be good. During the reporting period, the company's inventory was 353 million yuan, year-on-year + 9.17%, of which raw materials and products in process totaled 297 million yuan, + 10.44% compared with the same period last year, which may indicate that the company is actively preparing goods for production due to the increase in the volume of production tasks; 41.7367 million yuan for goods in stock, + 4.69% for the same period last year; and 13.7985 million yuan for goods issued, year-on-year-2.38%, or indicates that there is a problem with the company's delivery. Due to the completion of the acceptance of OVS-03 satellites and Xinjiang ground stations, the number of projects under construction in the company decreased by 33.22% compared with the beginning of the period, and the project under construction was transferred to fixed assets, indicating that the company has completed capacity expansion. The current period of Leo satellite depreciation of 39.7007 million yuan, the company's short-term profits under pressure, but the future long-term performance is expected to continue to grow.
SoC business declined, SIP rose sharply, and the product structure conformed to the development of chip technology. In the first half of 2020, the company's income from SoC chip products was 862300 yuan (year-on-year-91.49%), its gross profit margin increased by 38.11pcts to 69.67% (+ 75.81% compared with the same period last year), and its gross profit margin increased by 10.14pcts to 88.95%. The company's SIP products continue to expand their batch applications in aerospace models and maintain their technical and market advantages in the aerospace field. The company actively lays out, establishes the new strategic development direction of artificial intelligence, formulates the research and development of artificial intelligence chip and the application research of artificial intelligence processing algorithm, and the product structure conforms to the development of chip technology.
Risk factors: satellite big data business promotion progress is not as expected, new product research and development is not as expected, product market expansion is not as expected.
Investment suggestion: the company's current income has declined, short-term performance is under pressure, and the company's 2020 EPS forecast for 21 years has been lowered to 0.15 EPS 0.20 yuan (the original forecast is 0.25 Universe 0.31 yuan respectively), and the new 2022 EPS forecast is 0.27 yuan. The current price is 12.50 yuan, corresponding to the PE of 2020-21-22 is twice that of 84-63-47. Considering the valuation level of the company and the company's market position in the field of aerospace electronics and satellite big data, it maintains a "buy" rating with a target price of 15 yuan (corresponding to 100 times PE in 2020).