Steady revenue growth, continue to be bullish on 5G and corporate IT
Yunhua opportunity released its 2019 annual report on the evening of April 20, with annual revenue of 4.471 billion yuan (YoY18.69%) and net profit of 117 million yuan (YoY-45.85%). The performance was lower than expected, mainly due to the increase in business input costs and had not yet been translated into revenue. Taking into account the new infrastructure to promote information construction, as well as the operator 5G construction, the company's related business is expected to benefit. The company's EPS is expected to be 0.34,0.43 and 0.58 yuan respectively from 2020 to 2022, maintaining a "buy" rating.
Revenue is growing steadily, and telecom, financial and public security services continue to develop.
In 2019, the company achieved an increase of 18.69% in operating income, including revenue growth of 9.35%, 18.11%, 16.28% and 28.91% in telecommunications, finance, government and network product sales respectively. The company continues to promote the cloud network convergence business of digital transformation of operators in the telecommunications industry, and the market share is expected to further increase in the future. In addition, as banks and large insurance companies and other customers promote cloud computing, big data system construction, the company's financial business is expected to accelerate the development. At the same time, in 2019, the company successfully won the bid in Shijiazhuang City "at most one run (data collection)", police cloud, entry and exit management and other products continue to maintain the dominant position of the industry, to further improve the product line of government business.
The decline in gross profit margin is a drag on annual performance, the expense rate is optimized, and 20-year profitability is expected to improve.
The company's gross profit margin in 2019 was 16.3%, down 4.28 percentage points from 18 years. On the one hand, telecom operators increased their investment in 5G network infrastructure in 2019, which delayed the landing of the operation support system project. As a result, the company's input cost did not achieve revenue transformation. It is expected that with the gradual landing of the 20-year project, the telecom business gross profit margin is expected to rise. On the other hand, the company increased investment in government projects in the past 19 years to build domestic benchmarking projects, resulting in higher costs of the business. In terms of expense rate, the company's sales expense rate, management expense rate and R & D expense rate have all decreased significantly compared with 18 years. With the improvement of the company's cross-industry replication ability, it will help to further enhance profitability.
The quarterly report was affected by the epidemic, and continued to be optimistic about the opportunities of 5G and enterprise IT cloud industry throughout the year.
According to the announcement of the company's quarterly report for 20 years, the company achieved an operating income of 749 million yuan (YoY- 25.42%) and a net profit of 4.7887 million yuan (YoY-62.77%). The negative growth was mainly affected by epidemic factors, but considering that the company was a project-based software company, the net profit in the first quarter made a small contribution to the whole year (19Q1 accounted for 11.0% of the annual net profit). As 5G provides an incremental market for BOSS business in the past 20 years, as well as the development opportunities of enterprise IT cloud under the background of new infrastructure, we continue to be optimistic about the future development of the company.
Continue to develop and maintain the "buy" rating
We continue to value the core advantages of the company's long-term vertical industry accumulation, and are expected to benefit from the improvement of enterprise IT cloud prosperity in the 5G era, resulting in a multi-point blossom in the three major fields of operators, government and finance. According to the gross profit margin of 19 years, the gross profit margin of the company in 20-22 is adjusted, and the profit forecast is lowered. It is estimated that the EPS of the company in 20-22 is 0.34,0.43 and 0.58 yuan respectively (the previous forecast EPS is 0.50 yuan and 0.66 yuan respectively), and the corresponding PE is 23.4X, 18.3X and 13.8X respectively. With reference to the average 20-year PE valuation of A-share comparable company is 32.86 times, considering that the company is currently in the business investment period of big data, the company is conservatively given a 20-year PE of 29-32 times, corresponding to the target price of 9.86-10.88 yuan per share, maintaining a "buy" rating.
Risk hint: the construction progress of operator 5G is lower than expected, and the bidding of the project affected by the epidemic has been postponed.