Items:

The company publishes its Annual report 2020 and Quarterly report 2021:

In 2020, the revenue was 380 million yuan, up 34.30% over the same period last year; the net profit was 97.6424 million yuan, up 31.43% over the same period last year; and the non-net profit was 83.1349 million yuan, up 29.83% from the same period last year.

In the first quarter of 2021: revenue was 73.158 million yuan, up 94.14% over the same period last year; net profit from home was 13.3882 million yuan, up 369.86% from the same period last year; and non-net profit was 12.0899 million yuan, up 323.55% from the same period last year.

Comments:

There has been a substantial increase in performance and steady progress in the development of the national market. Despite the impact of the epidemic, the company's revenue in 2020 grew by 34.30% year-on-year, up from 27.69% in 2019. From a product point of view, the company's building information software and intelligent site products increased by 37.41% and 30.42% respectively. In 2020, on the basis of maintaining the advantages of East China, the company's revenue in the northwest region was about 9.07 million yuan, an increase of 88.17% over the same period last year. South China, North China and other regions achieved revenue growth (source: company announcement), and the development of the national market is being actively promoted.

Gross profit margin remained stable at more than 80 per cent and 21Q1 profits grew by more than 300 per cent. The company has a high degree of production, the proportion of income from the two major sectors (building information software and intelligent construction sites) is relatively stable, and the proportion of building information software with high gross margin is relatively high (more than 55%), which makes the company's gross profit margin more than 80% all the year round; on the expense side, the 20-year management expense rate and sales expense rate are the lowest in the past three years (source: company announcement); profits have increased steadily in the past 20 years. 21Q1, on the basis of high income, the expense rate of the company during the period is higher than that of 20 years, but lower than 20Q1; the profit increases by more than 300% (source: company announcement).

With the accelerated development of the intelligent construction industry, the company has successfully built Xiaoshan International Airport and many other benchmarking cases in the past 20 years. China's intelligent construction industry maintained a steady growth rate of more than 20% from 2012 to 2019, and the integration of 5G and intelligent construction sites accelerated development (source: Academia Sinica). In 2020, the company successfully built many typical project cases, such as the third-level project II of Xiaoshan International Airport, the second phase of the National Convention Center project, the Hangzhou Railway West Station project and so on (source: company official account). Among them, the Xiaoshan International Airport project has achieved full coverage of "5G+bim" application, which is the first 5G "intelligent site project" in Zhejiang Province (source: Tencent News). With the "platform + component" form, the company can provide a wealth of product solutions, as well as benchmarking cases, which is expected to grow steadily with the rapid development of the intelligent construction industry.

Profit forecast, valuation and investment rating. The development prospect of domestic construction information industry is huge, and the company is a leading enterprise in the industry. We maintain the forecast that the company's operating income will grow by 34.7%, 36.4% and 38.0% respectively from 2021 to 2023, and the growth rate of net profit will be 30.6%, 37.7% and 36.6% respectively, and the EPS will be 2.35,3.24,4.42 yuan respectively. Based on the closing price on April 23, 2021, the price-to-earnings ratio is 35-25-19, respectively. We maintain the target price range of 117.5-141RMB per share and maintain the "recommended" rating.

Risk hints: uncertainty of information investment in the construction industry; intensification of competition in the industry; uncertainty in the process of market promotion.