Overview of events
Dongyi Risheng released a report for the third quarter of 2020, the company achieved revenue of 1.81 billion yuan in the first three quarters of 2020, down 34.94% from the same period last year; net profit from home was-214 million yuan, down 60.44% from the same period last year; and net profit after deducting non-return was-223 million yuan, down 54.77% from the same period last year. Among them, the operating income of Q1, Q2 and Q3 was 1.94,6.64 and 952 million yuan respectively, which was-75.69%,-37.82% and + 3.81% respectively compared with the same period last year, and the net profit was-2.33,0.13 and 32 million yuan respectively, which was-192.68%,-170.56% and + 145.23% respectively. The net profit after deducting non-return is-2.39,0.13 and 30 million yuan respectively, which is-166.27%,-178.24% and + 142.05% respectively compared with the same period last year. In the third quarter, the performance achieved positive growth compared with the same period last year, and the performance continued to improve.
Analysis and judgment:
Revenue side: sufficient on-hand orders, Q3 performance growth rate became positive compared with the same period last year.
From a quarterly point of view, the revenue of Q1, Q2 and Q3 is-75.69%,-37.82% and + 3.81% respectively compared with the same period last year, and the net profit is significantly improved from-192.68%,-170.56% and + 145.23% respectively compared with the same period last year. We believe that the main reason is that as the domestic epidemic is stable, the company's engineering business team enters the scene, and the growth of business income improves quarterly. The company has sufficient orders on hand, and in the first half of the year, the company has made great efforts to expand online channels, and the situation of receiving orders is good. By the end of the third quarter, the contract debt of the company is 1.445 billion yuan, which is 654 million yuan higher than that at the beginning of the year. As of Q1, Q2, Q3, the contract liabilities at the end of the year are 9.78,13.18 and 1.445 billion yuan respectively.
Profit side: the profitability of Q3 has been greatly improved and the expenses have been well controlled during the period.
In the first three quarters of 2020, the gross profit margin and net profit margin of the company were 33.17% and-10.55% respectively, which were + 0.53pct and-7.05pct respectively compared with the same period last year. The gross profit margin increased slightly compared with the same period last year, and the decline in net profit margin was significantly narrower than that in the first half of the year. From a quarterly point of view, Q1, Q2 and Q3 gross profit margins are 34.17%, 29.89% and 35.26% respectively, which are + 3.22pct,-5.29pct and + 4.11pct respectively compared with the same period last year. The net profit rates are-122.88%, 0.32% and 4.71% respectively, and the profitability of Q3 is significantly higher than that of gross profit margin. The net profit margin is significantly higher than the gross profit margin, mainly due to the cost control of the period. In the first three quarters of 2020, the company period expense rate was 44.17%, year-on-year + 9.13pct, in which sales expense rate, management expense rate (including R & D), and financial expense rate were + 4.45pct, + 4.98pct,-0.30pct to 25.59%, 18.63%,-0.06%, respectively. From a quarterly point of view, the expense rate during the single quarter of Q3 is 29.49%, year-on-year-6.65pct, in which the sales expense rate, management expense rate (including R & D) and financial expense rate are-4.79pct,-1.74pct,-0.12pct to 17.31%, 12.01% and 0.17%, respectively. As income continues to improve, the expense rate during the period decreased significantly compared with the same period last year.
The net cash flow generated by business activities has become positive, and the layout of smart homes has been increased.
The net cash flow generated by the company's operating activities in the first three quarters of 2020 was 203 million yuan, down 6.52 percent from the same period last year. From a quarterly point of view, the net cash flow generated by Q1, Q2 and Q3 operating activities is-1.98,0.06 and 209 million yuan respectively, compared with the same period last year. The net cash flow generated by Q3 operating activities in a single quarter improved significantly, mainly due to the continuous recovery of the company's performance and an increase in payback. In addition, the company increased its investment in smart home R & D and application projects. The project under construction in the first three quarters of 2020 was 20 million yuan, an increase of 69.54% over the same period last year. The company previously introduced XIAOMI Technology as a strategic investor. In the future, it will rely on XIAOMI's in-depth layout in the field of smart things, speed up the exploration of the integration of AIoT technology and smart home lifestyle, and continue to enhance the company's competitiveness.
Investment suggestion
The company has sufficient orders on hand, and the introduction of war investment XIAOMI technology to expand digital decoration and smart home and other areas to support performance growth, maintain the previous profit forecast, it is estimated that the 2020-2022 return net profit is 0.14,2.23,254 million yuan respectively, corresponding to 2021 PE is 14 times, maintain the "buy" rating.
Risk hint
Market competition aggravates the risk; the development of new business is not as expected.