This report is read as follows:
Through reasonable control of expenses, the company's net profit improved significantly compared with the same period last year after divesting the business with low gross margin. In the future, the company will focus on the layout of "5G + Wisdom and Health" and accurately cut into the Great Health track.
Main points of investment:
Maintain the profit forecast, maintain the target price of 10.99 yuan, and maintain the "overweight" rating. In the first half of the year, due to the impact of the epidemic, many network planning and design projects could not be carried out on site. The side-to-side ratio of income and profit in the third quarter has been significantly improved compared with the same period last year. We maintain the forecast of 2020-2022 net profit of 2.17pm, which corresponds to an EPS of 0.22max, 0.32max, 0.41.
Considering that the prosperity of the Internet of things and the intelligent health industry will continue to rise in the future, the company has obvious advantages in this fast technology, corresponding to 34 times PE in 2021, maintaining the target price of 10.99 yuan.
The cost is well controlled and the downstream demand tends to improve. Q3's single-quarter operating income was 110 million yuan, an increase of 7.0% over the same period last year, while its net profit was 40 million yuan, an increase of 87.7% over the same period last year. Revenue growth benefited from the alleviation of the epidemic, a significant improvement in production and operation, and the release of downstream demand for products. The substantial increase in homing net profit is due to the company's reasonable control of sales expenses, which decreased by 42.03% compared with the same period last year. At the same time, the repayment of bank loans and financial expenses were also reduced by 62.60% compared with the same period last year, further optimizing the financial structure.
Spin off the non-core business and focus on the layout of "5G + intellectual health". The company stripped off the operation and development services of the Internet of things Academy of things and focused on 5G downstream application scenarios such as smart city and smart medicine, significantly improving the overall profitability. Relying on the advantages of 20 years' accumulation of communication technology, the company uses 5G to enable large health industry applications and expand business boundaries. With the help of genome-wide data analysis technology to achieve accurate disease prediction, accurate prevention and accurate medical care. The smart health business is expected to become the company's main source of increment in the future.
Catalyst: acceleration of 5G network construction, accelerated landing of the Internet of things industry
Risk hint: the progress of 5G network construction is not as expected, and the development of new products is not as expected.