Event
The company issued a half-year performance forecast for 2020, with an estimated net profit of-58 million yuan to-53 million yuan. The company announced the signing of a strategic cooperation framework agreement with Tencent Cloud.
Brief comment
1. The net profit in the second quarter is expected to become a regular employee, which is generally in line with expectations.
In the first half of 2020, the company is expected to achieve a net profit of-58 million yuan to-53 million yuan, a significant decline compared with the same period last year (185 million yuan); it is expected to deduct non-net profit of about-80 million yuan to-75 million yuan, a significant decline compared with the same period last year (175 million yuan).
In the single quarter of 2020Q2, the company expects to achieve a net profit of 980000 yuan to 5.48 million yuan, a year-on-year growth rate of-98% to-88%. Compared with 2020Q1 (a loss of 58.98 million yuan), the company becomes a regular employee, deducting non-net profit of about-10.18 million yuan to-5.18 million yuan, a year-on-year growth rate of-122% to-111%, which is narrower than the loss of 2020Q1 (- 69.82 million yuan). The company's overall poor performance in the first half of the year is expected to be mainly due to the impact of the epidemic on the company's production, sales and customer delivery, and the slow progress of business recovery. in addition, it is also related to the company's strengthening of vehicle networking, law enforcement and standardization of business research and development and market investment. With the gradual weakening of the impact of the domestic epidemic in the second quarter, the company's performance showed a trend of improvement.
2. The continuous ecological expansion of vehicle networking cooperation is expected to accelerate the landing of the business.
On July 14, 2020, Gao Xinxing signed a strategic partnership agreement with Tencent Cloud. The two sides reached a strategic partnership in the fields of intelligent network connection of new infrastructure, intelligent travel, intelligent transportation, smart city, intelligent inspection robot, etc., and agreed to integrate their respective advantages to customize joint solutions to carry out long-term technical and business cooperation in the form of joint development of local regional markets, technical cooperation and joint declaration of science and technology projects. Give full play to their respective advantages and jointly promote the development of the cause. In the above areas of cooperation, Gao Xinxing and Tencent Cloud should give priority to each other for cooperation, discuss the specific cooperation issues, and sign an independent contract with a validity period of three years. Prior to this, Gao Xinxing announced the signing of a strategic cooperation framework agreement with Baidu, Inc. on May 27, 2020. Gao Xinxing will deeply participate in Baidu, Inc. 's Apollo plan as an important partner of Baidu, Inc. 's intelligent transportation ecological cooperation. The two sides will form a joint solution on vehicle-road coordination, intelligent information control, intelligent network connection and self-driving, which will be jointly promoted to the market. Since June 2019, Gao Xinxing has successively signed strategic cooperation agreements with ZTE Corporation, Horizon, Pingjia Technology, Radium God Intelligence, Century Qualcomm Inc, DiDi Global Inc., Wenyuan Zhixing, Baidu, Inc., Tencent Cloud, etc., constantly expanding car networking / self-driving partners, and carried out a lot of technical discussion and scheme adaptation work. We believe that Gao Xinxing has a complete layout in the field of vehicle networking, which can provide complete solutions, including OBU, RSU, MEC and other key equipment, and is expected to complement each other's advantages with partners in the future, further strengthen its competitiveness and accelerate the landing of vehicle networking business.
3. The car networking industry has gradually matured, and the company will continue to benefit.
From the point of view of the car end, the development of car networking has shown three trends since 2020: first, the accelerated layout of new players, such as the landing of Huawei's multi-car networking / self-driving products, XIAOMI and byte jumping into the local car networking; second, the accelerated change of new popular styles, such as the March sales of domestic Tesla, Inc. Model, and the architecture innovation of vehicle E led by Tesla, Inc. is promoting the application of vehicle networking to depth and popularity. Third, the penetration of new technologies has been accelerated, and the penetration of intelligent networking functions such as ADAS, OTA, 4G T-Box and speech recognition has been greatly improved. From the side of the road, according to the statistics of Dr. Wu Dongsheng of Gao Xinxing, by May 2020, more than 4000 kilometers of expressways have been or are about to carry out collaborative innovation demonstration of vehicles and roads, of which the total investment of Hangzhou-Shaoyong Expressway is 70.7 billion yuan, with an average cost of 400 million yuan per kilometer. We believe that the car networking industry is gradually becoming mature, large-scale applications are approaching, and the company is expected to continue to benefit.
4. Investment suggestions: since 2018, the company has strategically focused on the two main waterways of vehicle networking and standardized law enforcement, maintained high R & D investment, constantly launched new products, and accelerated to seize the market. The company suffered huge losses due to large impairment of goodwill in 2019 and is expected to usher in a performance inflection point in 2020. We estimate that the company's net profit in 2020 and 2021 will be 50 million yuan and 150 million yuan respectively, corresponding to 252X and 84X PE respectively.
5. Risk hints: the impact of the epidemic exceeds expectations; the business development of vehicle networking and law enforcement standardization is not as expected; the company integration and cost control are not as expected.