Signed the military procurement framework agreement, military information business next city company issued a notice on the evening of December 16, the company's holding subsidiary Shenzhen special hair Sanqi defense technology and special institutions customers signed a military procurement framework agreement, the subject of the agreement is a subsystem equipment, the amount of the agreement is about 626 million yuan, accounting for 13.45% of the company's 2019 business income, accounting for 207.57% of the company's 2019 military business income. We believe that the signing and follow-up implementation of the agreement is expected to significantly increase the revenue scale of the company's military business. In the medium and long term, the company's military industry information business is expected to benefit from the acceleration of national defense information construction and the improvement of national defense industry information level during the 14th five-year Plan period.
The company is expected to rely on the deep ploughing layout in the field of military information technology to create new growth points. We estimate that the company's EPS in 2020-2022 will be 0.11 yuan 0.39pm 0.50 yuan respectively, maintaining the "overweight" rating.
Join hands with Sanqi Technology to set up a joint venture company to jointly develop markets such as the army, armed police and strategic support forces. In September 2020, the company and Shenzhen Sanqi Technology established a joint venture company Shenzhen Sanqi Defense Technology (51% of the shares in special information and 49% in Shenzhen Sanqi Technology) to jointly promote the landing of a subsystem project and coordinate the development of markets such as army, armed police and strategic support forces. Develop radar, DC-XHD and other new services. Shenzhen Sanqi Technology is a high-tech enterprise specializing in the design and development of military and civilian Beidou communication equipment terminals, Beidou user machines and individual communication machines. We believe that this cooperation will help to enhance the supporting level of the company's military industrial chain, improve its R & D capability and customer development capability in the military industry field, and the newly signed military procurement framework agreement is expected to significantly enhance the company's military business revenue scale.
The military subsidiary has strong R & D strength, and the new product research and development company is progressing smoothly, mainly through the subsidiary Chengdu Fourier (business of deep ploughing military products, measurement and control integration, data link system, etc.) and Shenzhou Airlines (products involving UAV flight control system, airborne fire control computer, integrated guide and control computer, missile-borne computer, etc.) expand the layout of the military information field, and the R & D strength is strong. Customers are mainly aviation, aerospace and other military industrial groups, colleges, research institutes and so on.
Driven by the demand of military customers, the company's military electronic supporting business orders increased steadily in the first three quarters, the missile-borne computer products won the bid for new models, and the research and development of new products progressed smoothly.
In the medium and long term, it is expected to benefit from the acceleration of national defense information construction during the 14th five-year Plan period. The proposal of the CPC Central Committee on the formulation of the 14th five-year Plan for National Economic and Social Development and the long-term goals of 2035 issued in November 2020 makes strategic arrangements for China's national defense and military construction, which emphasizes the need to speed up the development of mechanization, information, and intelligent integration. We believe that at present, we are in the stage of starting a new round of five-year procurement plan, and the demand for military industry informatization will grow rapidly during the 14th five-year Plan period. The company has deep reserves in military matching, data link systems, airborne, missile-borne computers and other military information technology and products, and military orders are expected to grow rapidly.
Military information business is expected to bring new growth points, maintain the "overweight" rating, we are optimistic about the company's growth ability in the field of military information. We keep our profit forecast unchanged, and expect that the company's EPS in 2020-2022 will be 0.11 USD 0.39pm 0.50 respectively. Based on the segment valuation method (see page 2 for specific estimates), we believe that the reasonable valuation of the company in 2021 is 11.34 billion yuan, corresponding to the target price of 13.89 yuan (unchanged), and maintain the "overweight" rating.
Risk hint: increased competition in the optical fiber and cable industry has led to a decline in profitability; due to the contraction of energy consumption indicators in first-tier cities, data center business expansion is limited.