On October 30, the company released its quarterly report for 2020. During the reporting period, the company realized revenue of 15.825 billion yuan, down 10.97% from the same period last year; realized net profit of 277 million yuan, down 55.22% from the same period last year; and deducted non-net profit of 249 million yuan, down 58.32% from the same period last year.
Event comment
Epidemic situation-optical fiber gathering and bargaining to restrain growth: located in the epidemic area of Wuhan, the company's H1 business has been greatly affected and is expected to be in the process of recovery in the second half of the year. In 2020, the price reduction of optical fiber and optical cable collection is still serious. In China Mobile Limited's general cable collection in 2020, the number and price of the company winning the bid fell by 51.13% and 23.05% respectively compared with the same period last year. In the third quarter alone, the company achieved revenue of 6.385 billion yuan, up 10.29% from the same period last year, down 2.19% from the previous month.
Affected by the US entity list, there is still pressure on medium-term growth: in May 2020, Nanjing FiberHome Star was listed by the United States as an entity list. From a medium-term perspective, the import of high-end chips in the company's transmission equipment and network security business may be blocked, which has a certain impact on the company's product delivery capacity. Historically, the network security business is one of the main sources of profits of the company.
The gross profit margin is under short-term pressure, and the improvement of the 5G expansion period can be expected: in the third quarter, the company's gross profit margin is 21.42%, a year-on-year decline in 3.36pct, or due to the decline in the bidding price of 5G carrier network equipment and the winning price of optical fiber and cable business, the proportion of products with high gross profit margin or increase in the future upgrade and expansion, and the gross profit margin is expected to be improved.
On the expense side, the expense rate of 2020Q3 during the period is 19.67%, which is better than the same period last year. To sum up, the company achieved a net profit of 222 million yuan in the third quarter, an increase of 15.61% over the same period last year, and non-net profit of 203 million yuan, an increase of 11.97% over the same period last year.
Profit forecast and investment advice: 2020 epidemic & optical fiber collection bargaining may drag down the company's annual revenue growth. Affected by the US physical list, the import of high-end chips in the company's transmission equipment and network security business may be blocked, and medium-term growth is still under pressure. The company's gross profit margin is under short-term pressure, but it may be improved when it enters the 5G expansion period, and the cost side as a whole shows an improvement trend. It is estimated that the return net profit of the company from 2020 to 2022 is 6.93,10.52 and 1.274 billion yuan, corresponding to 40, 26 and 22 times of PE.
Risk hint
1. Under the influence of US sanctions, the company may have difficulties in delivering its products.
two。 The share of transmission equipment during the expansion period may decline.