The company released its 2020 annual report and 2021 quarterly report: the company's 2020 revenue was 2.14 billion yuan, an increase of 2.82% over the previous year; the net profit of returning mother was 158 million yuan, an increase of 5.11% over the previous year; net profit of the non-return mother was 137 million yuan, an increase of 19.41% over the previous year. The company's 2021Q1 revenue was 501 million yuan, down 3.40% from the previous year; the net profit of the returned mother was 57.72 million yuan, up 3.77% from the previous year; after deducting the net profit of the non-return mother was 4.62 million yuan, a decrease of 11.63% over the previous year.
Smart healthcare and transportation are growing steadily, and AI empowerment has brought about an increase in the gross margin of smart transportation business:
(1) From the perspective of revenue growth, the company's revenue growth rate in Q1 2021 was -3.40% year-on-year, while the revenue growth rates for the four quarters of 2020 were -5.92%, 6.41%, 5.31%, and 6.13%, respectively. The company's revenue growth rate in Q1 2021 was negative. Mainly due to the impact of the novel coronavirus epidemic, the company's project order acquisition, project implementation and project delivery were affected in stages.
(2) Looking at the revenue structure and gross margin, the company's smart transportation business revenue in 2020 was 1.01 billion yuan, up 3.3% year on year; gross profit margin was 29.9%, up 2.22 percentage points year on year; smart medical business revenue was 334 million yuan, up 11.38% year on year; gross profit margin was 33.83%, up 0.97 percentage points year on year; smart city business was 772 million yuan, down 1.04% year on year, gross profit margin 13.75% year on year, up 0.13 percentage points year on year. We believe that the increase in gross margin of the company's smart transportation business is mainly due to the company's continuous transformation of R&D results into intangible assets to enhance product competitiveness in 2020. In particular, the HERO-global traffic AI control system uses self-built data factories, deep reinforcement learning technology and multi-agent enhanced learning methods, which can simultaneously handle large-scale road traffic control and optimization on a global scale to achieve functions such as traditional information control, timing optimization, AI control, global optimization, and simulation and deduction. Some of the technical achievements of the project have been applied in Hangzhou, Nanchang, Taiyuan and other cities.
Deeply cultivate AI+ transportation to empower smart mobility: In terms of smart transportation and smart mobility, the company will focus heavily on R&D and innovation of AI traffic management, signal optimization, V2X traffic signals, etc.; at the same time, it will increase the innovative application of urban brain technology systems. On the basis of 2020, the company will continue to improve products and solutions for intelligent information and control, traffic signal timing, and comprehensive traffic management. Further consolidate the foundation of traffic data governance, strengthen integrated traffic signal control capabilities; cultivate digital operation services and rapidly replicate business models; closely integrate market needs to explore diverse traffic management scenarios; and deploy V2X terminal equipment to protect autonomous driving.
Continuing to promote the urban brain operator service provider strategy: the company further implements the “urban brain operator service provider”
Strategy. Among them, in the transportation field, the urban brain achieves a complete closed loop of the traffic brain and in-depth application services through the linkage between the brain center and hands and feet, and further application upgrades are achieved in Hangzhou, Nanchang, Taiyuan and other places and promoted in other target cities; the town street brain is modeled after Hangzhou's Sandun Town model, using Hangzhou's left streets, Hangzhou Qianjin Street, and Chengdu's Guyi Town as entry points, and will be fully promoted and replicated in Hangzhou's Xihu District, Zhejiang Province and other provincial cities.
Profit prediction and investment suggestions: We believe that the company has been deeply involved in the smart transportation field for more than 20 years, has introduced a series of smart products, solutions and applications, which have been fully recognized by the industry through practical applications. In the future, it will also continue to expand smart transportation segments and enhance data operation and service capabilities. We forecast that the company's revenue for 2021-2023 will be 2,638/32.03/3.8856 billion yuan respectively, net profit of the mother will be 196/241/295 million yuan respectively, and the corresponding EPS will be 0.30/0.37/0.45 yuan respectively.
Referring to comparable companies, the 2021 dynamic PE40-50 was given a corresponding reasonable market capitalization of 78.3-9.79 billion yuan, and the corresponding reasonable value range was 11.94-14.93 yuan/share, maintaining the “superior market” rating.
Risk warning: Smart transportation business expansion falls short of expectations.
