Main points of investment
The company's operation shows continuous improvement.
Affected by the epidemic situation, the international trade environment and other factors, the business income from January to September was 15.824 billion yuan, down 10.97% from the same period last year, and the net profit returned to the mother was 277 million yuan, down 55.22% from the same period last year. The company responded actively, stepping up the resumption of work and production, optimizing the allocation of internal resources, and expanding new business areas. Q2 basically returned to the level of the same period last year in a single quarter, and the operating situation of Q3 further improved. The revenue and profits of the single quarter increased by 10.29% and 15.20% respectively compared with the same period last year.
Operator customers have a good share of winning bids.
The company focuses on 5G and strives to improve market share. China Mobile Limited won an exclusive bid for the construction of 400G OTN system in Hubei Mobile Xiong'an New area Metro Transmission Network in 2020-2021, and two of China Telecom Corporation's five national regional ROADM networks were built in South China and Northeast China. In addition, winning the bid for China Mobile Limited GPON equipment (50% share), China Mobile Limited ordinary optical cable (9.72% share) and China Mobile Limited intelligent networking terminal (21% share) will also boost the performance of the communications sector.
Actively expand the layout of new business areas
Under the great opportunity of the new infrastructure, the company actively opened up the industry network market, achieved a breakthrough in the power generation market, and completed the contract signing of a number of rail transit communication system projects in Hefei, Zhengzhou, Wuhan, etc. subsidiary FiberHome Information Integration (consortium: Tencent Cloud Computing) won the bid Wuhan Smart City basic platform (Phase I) project.
Recently, the company reached a cooperation agreement with Jiangsu Huaxicun Marine Engineering Service Co., Ltd., jointly funded the establishment of Fenghua Ocean Engineering equipment Co., Ltd., focusing on submarine communications engineering construction and maintenance services, further deepen the company's marine communications strategic layout.
Profit forecast and valuation
The impact of the epidemic and international trade environment and other factors are still uncertain, maintaining the 2020-2022 return to the mother net profit of 10.2 MPA 1.723 trillion earnings forecast, PE 30-22-17 times, "overweight" rating.
Possible catalyst: the investment in the construction of transmission network is higher than expected.
Risk hints: the impact of domestic and foreign economic and political environment on the company is higher than expected; the impact of the epidemic is higher than expected.