Event: the company released the 2020 annual report, with revenue of 328 million yuan during the reporting period, an increase of 10.03% over the same period last year, a net profit of 72 million yuan, an increase of 108.38%, and a net profit of 52 million yuan, an increase of 132.04%.
The increase in gross profit margin and the decline in expense rate led to an increase in profitability: the company's net profit growth in 2020 far exceeded revenue growth, mainly due to the increase in business gross profit margin and the continued decline in expense rate. During the reporting period, the gross profit margin of the company's two main businesses, the integration of media operation platform project and high-tech video solution, increased by 9.29% and 3.86% respectively, resulting in an overall increase of 5.24% in gross profit margin. On the other hand, the three major expenditure rates of sales, management and R & D continued the continuous downward trend since 2019, decreasing by 0.51%, 0.33% and 1.92% respectively. Under the superposition of the two effects, the company's profitability has improved significantly.
Deep ploughing UHD + AI video, the high growth trend is expected to continue: with the rapid penetration of 5G applications, the upgrading of UHD in the video field continues to accelerate, and the evolution of 4K, 8K and AR\ VR will bring sustainable development impetus to the industry. The company takes this as the main direction, on the one hand, it strengthens the iteration of UHD codec technology such as 4K\ 8K, at the same time, it expands its business horizontally around AI+ video intelligence, and realizes the technology landing in the direction of intelligent business hall and fishing vessel supervision. During the reporting period, the company's high-tech video solution achieved revenue of 118 million yuan, an increase of 57.40% over the same period last year and an increase of 233.93% over the same period last year. In the future, with the further embodiment of the demand for ultra-high-definition video technology in sports broadcasting, VR and other directions, the company's related business is expected to maintain a high growth trend.
Investment suggestion: as the leading Internet video solution provider in China, as the country vigorously develops the ultra-high definition video industry and operators take advantage of 5G opportunities to comprehensively upgrade video and other content side, its business will usher in a new round of development peak. The company takes the operator as the starting point, actively expand other application areas, and the "video + AI" strategy is expected to become the driving force for its long-term development.
It is estimated that the EPS in 2021 and 2022 will be 0.56 yuan and 0.83 yuan respectively, giving a buy-A rating.
Risk hints: (1) the diversified market development does not meet expectations, and (2) the market competition of operators aggravates the risk.