Incidents:
The company achieved operating income of 1,089 million yuan in 20H1, an increase of 0.08% over the previous year; the net profit of the mother was 115 million yuan, a decrease of 8.01% over the previous year. Among them, Q2 achieved revenue of 564 million yuan in a single quarter, an increase of 6.41% over the previous year; net profit of the mother was 60 million yuan, a decrease of 8.47% over the previous year.
Q2 Revenue growth rate changed from negative to positive
The company's 20Q1 revenue declined year-on-year due to the COVID-19 pandemic, but the Q2 quarterly revenue growth rate changed from negative to positive, reflecting the company's steady operating ability. Gross margin increased 0.56 pct year on year. Among them, the gross margin of intelligent transportation and smart medical services increased 1.66 pct and 1.36 pct year on year.
An additional project of 360 million yuan won the bid
In the first half of the year, the company announced 3 new winning projects: 1) The consortium with China Railway Construction Engineering Group won the bid for the YMZF1B section project for the construction of the Yuxi-Mohan railway station building and production and living housing related projects. The winning bid was 1,208 billion yuan, of which the company won the bid for about 60 million yuan. 2) The EPC general contract project for the smart park project of the Information and E-commerce Industrial Park in the Zhengdong New Area won the bid price of 150 million yuan. 3) The total cost contract for the construction of the Heze to Qufu section of the Lunan High Speed Railway and the new Heze to Lankao Railway (Shandong section) customer service information system integration project was contracted for the QHHL-KX section project. The winning bid price was 150 million yuan. The total bid amount for the company's three projects was about 360 million yuan, accounting for 17.3% of the company's 2019 revenue, which will significantly drive the company's revenue growth.
The urban brain strategy is progressing steadily
The company's “urban brain” strategy continues to advance. The smart transportation application system covers 163 large, medium and small cities, and the smart health application system has entered more than 2,000 hospitals. In the future, the company is expected to broaden its layout through cooperation. Currently, it has cooperated with Baidu in vehicle road collaboration and intelligent information control, entered into cooperation with Anheng Information to jointly promote smart city data operation and maintenance services and data security construction, and is promoting the application of blockchain, edge computing, 5G and other technologies and products in urban brain strategies with Yibang.
Investment advice
Considering the gradual increase in the company's profitability and the new winning projects providing strong support for revenue growth, we believe that the company's net profit for 2020-2022 was 231 million, 318 million and 400 million yuan respectively. The corresponding EPS for the 2020-2022 EPS was 0.35, 0.49 and 0.61 yuan respectively, and the corresponding PE was 32.7, 23.8 and 18.9 times respectively, giving an “increase in holdings” rating.
Risk warning: Risk of macroeconomic fluctuations; project progress falls short of expectations.
