Main points of investment
Event: the company issued an annual performance forecast for 2020, the annual operating income was 800.90 million yuan, the net profit attributed to the shareholders of the listed company was 120,170 million yuan, and the net profit loss after deducting Africa was 147million yuan.
At the same time, the company announced that it intends to use its own funds to buy back the company's shares in the form of centralized bidding for the implementation of employee stock ownership plans or equity incentives, with a total capital of not less than 10 million yuan (inclusive), no more than 20 million yuan (inclusive), and a repurchase share price of no more than 7 yuan per share.
Affected by the epidemic, the performance hit bottom, goodwill impairment loss for the first time: since the beginning of 2020, continued to be affected by the COVID-19 epidemic, project stagnation, revenue recognition time delay led to a serious decline in the company's performance. LED shows that the proportion of export revenue is relatively high, overseas sports, advertising and other customer demand has declined, and some orders have been delayed or cancelled, resulting in a decline in revenue, on the other hand, actively explore the domestic market, expand the sales team, optimize sales strategies, resulting in an increase in domestic sales costs. Smart lighting business affected by the epidemic, national policies, the industry has entered a period of adjustment, the project is postponed or cancelled, the impact is also more serious. Therefore, the company's wholly-owned subsidiary Qianbaihui, which is engaged in landscape lighting business, has a goodwill impairment of 150.18 billion yuan (the remaining goodwill of the company is 1100,041 million yuan after the provision), and the company incurred a loss for the first time. If the impairment of goodwill is not taken into account, the net profit returned to the mother in 2020 is about 100.30 million yuan.
Adjust its strategy to open up the domestic market, and share buybacks demonstrate management confidence: in 2020, the company actively responded to the negative impact of the epidemic, increased investment in opening up the domestic market, timely promoted intelligent conference machines, film and television shooting LED systems and other products, and achieved results in transportation, finance, education and other fields. In January this year, the company successfully won the bid for Chengdu Tianfu Airport and Kunming Changshui Airport project, with the gradual recovery of the industry, the company's business is expected to get back on track.
The company announced that it intends to use its own funds of about 10 million to 20 million yuan for the company's share buyback to implement employee stock ownership plans or equity incentives, which demonstrates the management's confidence in the company's future development prospects and the recognition of the company's value, so as to enhance the enthusiasm of employees and help the company's long-term development.
The implementation of the fixed increase landing fund-raising project, Mini LED and other assistance to the long-term development of the company: the company launched a non-public offering of 39423074 shares at a price of 5.20 yuan per share in January this year, raising 205 million yuan. The investment projects and use plans include: 1) intelligent integration of intelligent networks; 2) Mini LED intelligent manufacturing base construction project; 3) intelligent lamppost system research and development project. 4) replenish the working capital. This fund-raising project revolves around the company's core business, expanding the main business capacity and new technology research and development, the layout is in line with the company's long-term development strategy, and expand the future growth space. After the impairment of goodwill, the risk is clear. With the recovery of the industry and the development of the domestic market and the implementation of fund-raising projects, it is expected to enter the upward channel of performance. The development of the company conforms to the industry trend and has a leading foundation in the field of financial technology. LED display has achieved commercial use of Mini LED display products. Therefore, long-term growth can be expected, and there will be more room for development after the labor pains affected by the epidemic.
Investment advice: therefore, we believe that the epidemic has a short-term negative impact on the company's performance and is still optimistic about future growth.
We expect earnings per share from 2020 to 2022 to be-0.23, 0.23 and 0.30 respectively. The return on equity is-13.2%, 9.8% and 11.5% respectively, maintaining the buy-B recommendation.