Main points of investment
Event: on April 16, FiberHome released its 2020 annual report. In 2020, the annual revenue was 21.074 billion yuan,-14.55% compared with the same period last year, and the net profit was 102 million yuan,-89.55% compared with the same period last year. Among them, Q4 realized revenue of 5.25 billion yuan,-23.7% year-on-year, and net profit of-151 million yuan. The company was seriously affected by the epidemic, and its performance declined, which was in line with our expectations.
The communications equipment business is still the core of profit, and initial results have been achieved in reducing costs and increasing efficiency: the large-scale development of 5G stimulates the demand for communication equipment. At present, the communication system equipment business is still the biggest profit point of FiberHome Communications, with revenue accounting for 61.56% of the total revenue, business revenue of-16.48% compared with the same period last year, and a gross profit margin of 19.63%, an increase of 1.06pp over 2019. The business revenue of optical fiber and cable business and data network products was-4.79% and-22.75% respectively compared with the same period last year, and the gross profit margin decreased by 0.89pp and 1.30pp respectively.
In terms of overall gross profit margin, the gross profit margin for the whole year of 2020 was 21.75%, which was lower than that in 2019 by 0.09pp.
The company incurred 1.36 billion yuan in sales expenses for the whole year, down 17.14% from the same period last year; the annual management expenses were 270 million yuan, down 4.58% from the same period last year.
Vigorously invest in R & D and enhance technological strength: FiberHome has been tamping the base of digital construction with core technologies, integrating superior resources and technologies, maintaining R & D efforts in high-end core technologies, and vigorously promoting the integration of vertical industrial chains to ensure the continuous improvement of product competitiveness. In 2020, the proportion of R & D personnel in the company reached 44.13%, and the conversion rate of scientific research achievements remained above 90%. Specifically, the annual R & D expenditure in 2020 was 2.579 billion yuan, + 10.55% compared with the same period last year, and R & D investment accounted for 14.82% of revenue.
FiberHome is expected to return to steady growth in the future: with the rapid growth of 5G base station construction and traffic stimulating the rapid growth of the communications equipment market, FiberHome and other communication equipment leading enterprises may usher in a new round of growth opportunities. At the same time, FiberHome has comprehensively begun to consolidate its core competitiveness advantages through the layout of the industrial chain, and its market share is expected to be further enhanced. We believe that under the dual role of our technology ahead of industry demand, the company's performance is expected to recover and achieve steady growth in the future.
Earnings Forecast and Investment rating: due to the slowdown in downstream demand and other reasons, we have lowered the EPS in 2021-2022 from 1.15shock 1.36 yuan to 0.37 shock 0.41 yuan, and it is expected that the EPS in 2023 will be 0.47 yuan. The current market capitalization corresponds to 2021-2023 PE times as much as 51-46-40, taking into account the slowdown in the company's performance growth, downgraded to "overweight" rating.
Risk hint: the deployment process of 5G is not as expected; the progress of network construction is not as expected; the progress of product development is not as expected.