Event: in 2020, the company achieved sales income of 577 million yuan, an increase of 22.38% over the same period last year; an operating profit of 103 million yuan, an increase of 6778.87% over the same period last year; and a net profit of 80.61 million yuan belonging to the owner of the parent company, an increase of 1657.46% over the same period last year, equivalent to 0.14 yuan of EPS. Net profit excluding non-recurring profit and loss was 50.6 million yuan, an increase of 356.49% over the same period last year. In 2020, there will be no distribution and no increase.

Integrated circuit and Beidou business drive the rapid growth of the company's sales revenue. The company's main products and business include integrated circuits, key components of Beidou navigation terminal, sales and operation services of Beidou navigation terminal, video images, security monitoring and so on. In the field of integrated circuits, in 2020, the company focused on communications, integrated display and control, automotive electronics and other markets, tapped and followed the needs of key customers in many ways, and formed a group of stable core users in the direction of key products such as radio frequency and high-speed interfaces. At the same time, it undertook a number of forward-looking and major scientific research tasks, with sales revenue of 208 million yuan for the whole year, an increase of 33.33% over the same period last year. In the field of Beidou terminal and operation, in 2020, the company implemented 85 baseband design and terminal R & D projects for Beidou 3, including 57 new projects, breaking through a number of key technologies of Beidou 3 core products, with annual sales revenue of 251 million yuan, an increase of 52.01% over the same period last year.

The profitability is improved and the expenses are well controlled during the period. In 2020, the company's comprehensive gross profit margin was 53.99%, an increase of 3.63 percentage points over the same period last year. The increase in the company's profitability is mainly due to the increase in the proportion of revenue from integrated circuits with higher gross margins and Beidou terminals and operating operations. In 2020, the company's period expense rate was 40.26%, down 1.65% from the same period last year, mainly because the management expense rate was 3.57% lower than the same period last year. In 2020, the company continued to increase investment in R & D, and the R & D expenditure rate increased by 1.37% year-on-year to 13.80%.

The company's Beidou business will speed up the transformation and integration. In the field of Beidou terminal and operation:

From 2016 to 2018, Beidou business showed a decline, Beidou No. 3 system was officially completed and put into operation in 2020, Beidou orders gradually resumed, many of the company's Beidou No. 3 terminals were evaluated well, and Beidou business will show a good trend of development with the market demand. During the 14th five-year Plan period, the company plans to speed up the integration of satellite navigation and other communication technologies, and accelerate the transformation from single navigation system applications to multi-system compatible applications, from navigation applications to integrated applications such as navigation, mobile communications and the Internet. While maintaining traditional users, actively cut into the industry / mass market.

Profit forecast: from 2020 to 2022, we forecast that the company's net profit attributable to the owner of the parent company will be 101 million yuan, 125 million yuan and 150 million yuan respectively, equivalent to 0.18,0.22 yuan and 0.27 yuan respectively for EPS. According to the closing price of 15.75 yuan per share on the previous trading day, the price-to-earnings ratio is 87 times, 70 times and 59 times respectively.

Risk tips: 1) increased competition; 2) the progress of new products is not as expected.