Events:
On the evening of October 30, the company released its quarterly report for the third quarter of 2020: in the first three quarters, the company realized revenue of 492 million yuan, an increase of 21.95% over the same period last year, a net profit of 138 million yuan, an increase of 57.81% over the same period last year, and a net profit of 132 million yuan, an increase of 54.70%. Of this total, the revenue in the third quarter was 198 million yuan, a year-on-year increase of 621%, and the attributable net profit was 56.8712 million yuan, an increase of 484.55% over the same period last year. The net profit attributable to non-deduction was 55.6937 million yuan, an increase of 453.38% over the same period last year. In this regard, our comments are as follows:
Main points of investment:
Net profit increased by 57.81%, and gross profit margin increased.
In the first three quarters, the company achieved revenue of 492 million yuan, an increase of 21.95% over the same period last year, realized net profit of 138 million yuan, an increase of 57.81% over the same period last year, and realized net profit of 132 million yuan after deduction, an increase of 54.70% over the same period last year, which was within the forecast range of the prospectus and in line with market expectations. among them, revenue in the third quarter was 198 million yuan, a year-on-year increase of 621%, and a net profit of 56.8712 million yuan. The year-on-year growth rate was 484.55%, and the attributable net profit after deduction was 55.6937 million yuan, an increase of 453.38% over the same period last year. The sharp increase in the third quarter was mainly due to the gradual landing of the company's on-hand orders (531 million yuan at the end of 2019). In the first three quarters, the company's gross profit margin was 52.99%, which was higher than the same period last year (1.4pct). The sales / management / R & D / financial expense rates were 8.46%, 5.34%, 5.63%, 0.43%, respectively, and decreased 4.61/2.25/0.21/0pct, respectively, compared with the same period last year. During the period, the expense rate was 19.01%, and 7.09pct was reduced compared with the same period last year.
The company, founded in 1997, is a high-tech industrial company with information technology as its core, relying on the research and development of related technologies such as video and audio, data processing, artificial intelligence and Internet of things, in-depth business scene, engaged in industry information system development, application and service. The company's main business is for education informatization, urban rail transit security to provide industry information products and solutions R & D, production, sales and services, and actively expand to smart cities and other fields.
The company has ploughed the industry for more than 20 years, the products have been widely used, and participated in the formulation of a number of industry standards, accumulated a large number of customer resources and rich project experience. With the company's technology and product advantages, the company's performance has achieved steady growth. Revenue increased from 326 million yuan in 2016 to 677 million yuan in 2019, with CAGR of 27.94%. The corresponding net profit after deducting Fei also increased from 39.57 million yuan to 147 million yuan, with CAGR of 54.78%.
The business of educational informatization has obvious advantages, and there are still some growth points in the future.
The company is one of the earliest companies engaged in educational informatization, including science and technology examination, intelligent teaching, vocational training, safe campus, etc., the company has participated in hundreds of provincial and municipal platforms, thousands of colleges and universities, and has completed the construction and transformation of more than 200,000 standardized examination rooms and tens of thousands of multimedia classrooms, as well as vocational training and safe campus products. Obvious advantages in technology accumulation, customer resources and project experience. The products are approved by the Ministry of Education and the market. In the past three years, the company's business revenue of educational informatization has been maintained between 3-350 million yuan, which remains stable as a whole. There are still growth points in the future: 1) the "Education Informatization 2.0 Action Plan" points out that the improvement of the information infrastructure will be basically realized by 2022; 2) the new college entrance examination system will be fully completed in 2020, which will give birth to the second round of national standardized examination site construction; 3) COVID-19 epidemic will stimulate cloud classroom and online education demand, and will form user stickiness to drive the education information demand to increase. On the one hand, the company has technology, project experience and other first-mover advantages, on the other hand, through investment projects to improve cloud and examination products to improve market competitiveness, will fully benefit the development of education information industry.
The growth rate of rail transit security business is relatively fast. By virtue of the advantages of project experience, the industry benefits from the development of rail traffic security business, including video surveillance and integrated security. The company's solution goes deep into the business scene and combines subway operation requirements with public safety management. It has been fully recognized by customers, and has successively provided professional video surveillance-based security products for rail traffic in more than a dozen cities, including Beijing, Xi'an and Hangzhou. And participated in the formulation of a number of technical standards, with technical advantages, the company's rail traffic security business achieved rapid growth, revenue increased from 96.65 million yuan in 2017 to 330 million yuan in 2019, with an average annual compound growth rate of 84.87%. With the rapid development of urban rail transit industry and the improvement of security standards, the demand for new and renovated sites will increase in the future, and the company is expected to benefit from project experience.
Profit forecast and investment rating: the first time to cover the "overweight" rating. It is estimated that the EPS of the company from 2020 to 2022 will be 1.71,2.31,2.81 yuan respectively, and the corresponding share price PE will be 28,21,17 times.
Risk hints: the risk of intensified market competition, the risk of lower-than-expected policies and downstream demand, the lower-than-expected risk of fund-raising projects, the risk of recurrent epidemic situation, and the downside risk of macroeconomic.