Main points of investment:
The company is a leading integrated technology service provider of the Internet of things in the industry. Founded in 2004, based on years of experience and technology development in building intelligence, environmental monitoring and informatization, and intelligent desulfurization operations, the company focuses on providing Internet of things applications for smart environmental protection and smart cities. According to the company's official website, core technologies such as intelligent sensors with independent intellectual property rights, cloud chain database, Internet of things IoT platform and artificial intelligence AI algorithm have been formed. In recent years, the company has made great efforts to develop and expand smart environmental protection and smart city business, and has been reflected in the main composition. From January to September 2019, smart environmental protection business accounted for the largest share, accounting for 47.3%, followed by intelligent desulphurization operation and smart city business, accounting for 19.9% and 16.7%, respectively.
Profound heritage, vertical expansion in many fields. We believe that for the Internet of things technology enterprises, the data closed loop can be formed after opening the perception layer, the network layer and the application layer, and the whole life cycle management from data acquisition to data application can help to ensure the overall effect of the implementation of the Internet of things projects. and then enhance the competitiveness of the company. According to the company's prospectus, the company has accumulated comprehensive and comprehensive capabilities in the Internet of things perception layer, network layer and application layer, which we believe are the cornerstone of the company's upgrade to the Internet of things big data service.
From the smart environmental protection business to the smart city field, the benchmarking project to create a demonstration effect. Taking the analysis of the company's regional structure as an example, we can see the improvement of performance brought about by the demonstration effect of benchmarking projects. In terms of intelligent environmental protection business, North China, represented by Shanxi and Henan, is the main service area of the company's intelligent environmental protection business; and with the further development of the business area, the contribution of business income in East China, represented by Anhui and Shandong, increased, accounting for 34.34% of the income in East China in the third quarter of 2019. The company's smart environmental protection and other businesses will continue to expand in the future, and it is expected that the company's revenue will be more widely distributed in the future.
5G helps the Internet of everything and opens up trillions of market space. With the advent of 5G, the spectrum efficiency of the system will achieve a hundredfold increase in capacity, supporting the network demand for hundreds of billions of device connections. We believe that the integration of Internet of things technology and multi-industries has brought a lot of space, but at present there is no obvious enterprise pattern in the industry.
The company has accumulated a wealth of technical experience in the field of the Internet of things, and in the short term, it will have a bright future in the field of smart environmental protection and smart cities; in the long run, it is also expected to expand its sphere of influence in other areas.
Profit forecast and investment advice. We believe that the company has accumulated rich industry experience and technology in the field of the Internet of things, deeply cultivated wisdom and environmental protection, and cut into the field of smart city, and is a leading comprehensive technology service provider in the industry. With the development of smart environmental protection and smart city business, the company is expected to maintain rapid growth. We forecast that the operating income of the company from 2020 to 2022 will be 720 RMB 11.60 / 1.695 billion yuan, the net profit of ownership will be 2.21 pm 372pm 552 million yuan, and the corresponding EPS will be 2.86 pm 4.80 pound 7.14 yuan respectively. Refer to the comparable company, give the dynamic PE55-60 times in 2020, the reasonable value range of 6 months is 157.30-171.60 yuan, and give the rating of "better than the big city" for the first time.
Risk tips: smart environmental protection and smart city business development is not as expected; industry competition intensifies.