Main points of investment
Event: the company announced that its operating income in 2019 was 1.26 billion, down 2.43% from the same period last year, and its net profit was 131 million, up 11.53% from the same period last year. At the same time, 2020Q1, the company achieved operating income of 183 million, down 11.18% from the same period last year, and realized a net profit of 24 million, an increase of 9.92% over the same period last year.
The business structure is optimized and the operation business is growing rapidly. The growth rate of net profit is significantly higher than that of income, due to business adjustment. The gross profit margin in 2019 was 32.91%, an improvement of 4.16% over the same period last year. Among them, operating services were 650 million, an increase of 16.48% over the same period last year, gross profit margin increased by 2.34pct, and operating capacity was significantly improved. 2020Q1 achieved a net profit of 24 million, an increase of 9.92% over the same period last year, due to the promotion of gridded products.
The increase in expense rate is mainly due to the increase of equity incentive amortization and the continuous increase of R & D investment. In 2019, the management expense rate was 8.28%, an increase of 2.45 pct over the same period last year, mainly due to the company's additional equity incentive fee of 43 million yuan, while R & D accounted for 7%, an increase of 0.7 pct. 2020Q1, the management expense rate and sales expense rate are 8.13% and 8.78% respectively, which is basically stable. R & D accounts for 9.49%, which is higher than the same period last year. The company continues to increase R & D investment to consolidate its digital city construction capacity.
The construction of urban management 2.0 is getting better and better, and block chain technology is introduced to build the ability of comprehensive urban management services. With the deepening of the reform of the super-ministry system, the accelerated development of gridding and fine urban management is expected to bring the construction demand of urban management 2.0. In 2019, the company will introduce block chain, which is expected to innovate the industrial capacity of digital city and realize the rapid development of the company.
Profit forecast and investment advice: the company's net profit in 2020-22 is RMB 1.94 million, respectively, and the corresponding PE is 28x/21x/18x, with a rating of "prudent overholdings".
Risk hint: policy promotion is not as expected, and related resumption of work and production will affect the construction progress.
