Overview of events

According to the company's quarterly report in 2020, the company's operating income in the first three quarters of 2020 was 227 million yuan, down 8.57% from the same period last year; the net profit was 17.9334 million yuan, down 23.33% from the same period last year; and the net profit after deducting it was 16.4012 million yuan, down 29.72% from the same period last year.

Analysis and judgment:

Due to the impact of the sudden epidemic on the company's business, the company's performance declined in the first three quarters, and the profit growth rate decreased significantly higher than the revenue caliber, mainly due to the decline in the company's gross profit margin and the sharp decline in minority shareholders' income and non-operating net income. Considering that the domestic epidemic situation has been fully controlled, the cumulative effect and strong demand of opening up new customers in new industries in the early stage of the company have gradually recovered, and it is expected that there will be a significant improvement in the fourth quarter. The operating income in the first three quarters of 2020 was 227 million yuan, down 8.57% from the same period last year. The net profit in the first three quarters of 2020 was 17.9334 million yuan, down 23.33% from the same period last year. The main reason behind the decline in Q3 performance exceeding the decline in revenue is that the overall gross profit margin fell from 39.52 per cent in the same period last year in 2019 to 38.42 per cent in the first three quarters of 2020. During the period of high cost rate, expand production investment, strengthen the R & D team, although the short-term realization of the increased burden of costs, will become an important support for the company's long-term development. The sales expenses in the first three quarters of 2020 were 38.2707 million yuan, and the rate of sales expenses increased to 16.85 percent from 13.16 percent in 2019. It is mainly due to the increase of sales staff. The management expenses in the first three quarters of 2020 were 18.7923 million yuan, and the rate of management expenses rose to 8.27 percent from 6.40 percent in 2019. The R & D expenditure in the first three quarters of 2020 was 45.1525 million yuan, and the R & D expenditure rate rose to 11.02% from 9.12% in 2019, which was due to the company's increased investment in R & D projects. In addition, minority shareholders' rights and interests were 2.1492 million yuan, an increase of 382.81% over the same period last year; the company's non-operating income reached 15900 yuan, an increase of-85.08% over the same period last year, while non-operating expenses totaled 296400 yuan, which was also the main factor that the year-on-year decline in profit exceeded revenue. Considering that the domestic epidemic situation has been fully controlled, the cumulative effect and strong demand of opening up new customers in new industries in the early stage of the company have gradually recovered, and it is expected that there will be a significant improvement in the fourth quarter.

Investment suggestion

As a leading market research company characterized by data analysis in China, Huichen Information is expected to enjoy a higher valuation level after landing on Kecheng Board-- first, data asset operation is becoming a hot spot pursued by the industry and capital market. the format innovation around the data represents the development direction of the new economy in the future. Second, market research with data analysis as the main means has a direct contribution to the profit creation ability of multi-industry head companies, and is an important enabler for multi-industry marketing efficiency improvement and model innovation. Based on the company's good development trend and more active business strategy, we maintain the original revenue and profit forecast. It is estimated that the net profit of homing from 2020 to 2022 will be 6708.7070xx27x892646 million yuan respectively, with a compound annual growth rate of 13.66%. Give the company 70 times the 2020 homing net profit valuation, maintain the target price of 63.22 yuan, and maintain the buy rating.

Risk hint

The risk of non-recovery of accounts receivable, the risk that the performance of participating companies and M & A companies is not up to expectations, the risk of compliance in the use of data, the risk of low shareholding by the actual controller, liquidity risk, systemic risk and so on.