Event
The company released its 2019 performance KuaiBao. The company achieved an operating income of 1.568 billion yuan in 2019, an increase of 51.95% over the same period last year, and a net profit of 125 million yuan, down 8.09% from the same period last year.
The company issued a public announcement on the result of the public solicitation and transfer of the shares of the controlling shareholders, confirming China Telecom Corporation Group Investment Co., Ltd. as the transferee of the transfer.
Brief comment
The company's revenue maintained high growth, and the company's profits declined due to the increase in the proportion of low gross margin business and the increase in market and R & D investment. The company achieved operating income of 1.568 billion yuan in 2019, an increase of 51.95% over the same period last year. With the increase in orders, the company's revenue continued to maintain high growth. The company achieved a net profit of 125 million yuan in 2019, down 8.09% from the same period last year, and the growth rate of net profit was much lower than that of revenue. On the one hand, because the hardware part of the company's major projects in 2019 accounted for more, and fire engineering and other low gross profit margin business income has increased, the company's gross profit margin has declined. On the other hand, the company increases the investment in market and R & D, and the number of personnel increases, which increases the cost during the company period.
As the company's fund-raising project is completed in July 2019, the future personnel expansion will slow down, and the company expense rate is expected to decline.
China Telecom Corporation is expected to become the controlling shareholder, leading telecom cloud infrastructure and NB-IoT, deeply ploughing the government and enterprise market, and strong business cooperation between the two sides. The controlling shareholder of the company, clear Control Venture Capital, intends to transfer 18.68% of the total share capital of the company, and China Telecom Corporation is currently identified as the transferee of this public solicitation. Subject to the approval of SASAC, China Telecom Corporation is expected to become the company's controlling shareholder.
China Telecom Corporation has a leading edge among operators in the areas of cloud infrastructure and NB-IoT Internet of things. In terms of cloud infrastructure, according to the China Public Cloud Services Market (2019Q3) tracking report released by IDC, China Telecom Corporation Cloud ranks third in public cloud market share, second only to Aliyun and Tencent Cloud, and is the only central enterprise cloud in the top five, occupying a leading position in the government and enterprise market with the advantage of "security". At present, more than 300 municipal government cloud platforms are based on Tianyi Cloud. In terms of NB-IoT, China Telecom Corporation has more than 400,000 NB-IoT base stations and has the largest commercial NB-IoT network in the world. The company's emergency security needs to be combined with cloud infrastructure and a large number of Internet of things sensors, and the two businesses have good cooperation. at the same time, China Telecom Corporation takes the lead in the layout of the smart city and is expected to bring more resources to the company's domestic projects.
The actual controller will not change the cooperative relationship with Tsinghua University. After the transfer of equity, Tsinghua Holdings remained the third largest shareholder of the company, and the company had an agreement with Tsinghua University on the transformation of scientific research achievements. Su Guofeng, vice dean of Hefei Institute of Public Security of Tsinghua University and assistant dean of the Institute of Public Security of Tsinghua University, is the president of the company, and Academician Fan Weicheng of the Institute of Public Security of Tsinghua University is the chief scientist of the company, so the company is deeply bound with Tsinghua University. Technology will continue to take the lead in the field of emergency.
The company's urban lifeline business has broad potential for development. After China Telecom Corporation joined the company, the urban lifeline business entered a new period of development. The company's urban lifeline business has great potential for development. first, the amount of money in a single city is expected to increase continuously, such as the first phase of the Hefei project is 76 million, the second phase is expected to increase to 920 million, and the third phase is expected to reach 2 billion. Second, off-site replication, Xuzhou, Jiangxia, Huaibei and Foshan project landing and bidding have proved that the company's urban safety lifeline business has off-site replication. From the perspective of target cities, there are 25 cities with more than GDP in Hefei, with 3 billion in the third phase as a whole, and the market space is expected to reach 75 billion. Medium-sized cities such as Xuzhou are expected to have a scale of about 1 billion, while 18 cities with GDP between 500 billion and Hefei GDP, with a market space of 18 billion. From the situation of Huaibei and other cities, small cities will also invest 0.5-150 million to build urban safety lifeline, about 200 cities, market space of 20 billion, the overall size of about 110 billion, is still in the early stage of development, it is still early from the ceiling. With China Telecom Corporation becoming the controlling shareholder of the company, with the profound resources of central enterprises, the competitiveness of domestic projects has been further enhanced, thus accelerating the process of remote replication of the company's urban lifeline business.
Profit forecast and investment rating:
China Telecom Corporation has a leading edge in cloud infrastructure and NB-IoT, and deeply ploughs the government-enterprise market. The two sides have strong business cooperation and are expected to bring more resources to the company's domestic projects. It is estimated that the company's homing net profit from 2020 to 2021 is 1.93 yuan and 292 million yuan respectively, and the corresponding share price PE is 57 and 37 times respectively, maintaining the buy rating.
Risk hint: the confirmed revenue of overseas orders is not as expected; the urban lifeline project of Hefei is not as expected; and the landing of other cities is slow.
