Core conclusion
Affected by the spread and repetition of the epidemic, the performance was lower than expected. In 2020, the company realized operating income of 961 million yuan, down 28.22% from the same period last year, realized net profit of 117 million yuan, down 23.47% from the same period last year, and realized net profit of 89 million yuan after deducting non-return, down 38.31% from the same period last year. In 2021, Q1 Company realized operating income of 161 million yuan, an increase of 4.76% over the same period last year. Its net profit was-5 million yuan, and its loss decreased by 79.62% over the same period. Affected by the spread and repetition of the epidemic in 2020, the company's performance was lower than we had expected.
The revenue is affected by the epidemic, and the cost is relatively stable. In 2020, the command and dispatching business, which accounts for a relatively high proportion of revenue, fell by more than 30%, resulting in a 28.22% drop in revenue compared with the same period last year. The services of command and dispatching, intelligent applications, industry Internet of things and maintenance services reached 5.43,2.48,1.24 and 47 million yuan respectively, down 32%, 15%, 30% and 36% from the same period last year. The increase in gross profit margin of command and dispatching communications products with the highest proportion of revenue drives the overall gross profit margin to be relatively stable. During the period of the company, the overall cost remained stable, and the level of net interest rate was basically stable. The company attaches importance to research and development. In 2020, the company maintained a high level of R & D investment, reaching 123 million yuan, accounting for 12.81% of the operating income.
The company's forward-looking layout of 5G applications will benefit from the "new infrastructure" Dongfeng. This year is the beginning of the 14th five-year Plan. At present, 5G-R is in the stage of exploration and deployment. With the continuous implementation of 5G, 5G-R is expected to gradually replace the GSM-R system, and we expect to usher in an accelerated replacement period in 2023. The market space of railway communication equipment is broad, and it is expected to expand to 3.4-9.5 times of the current scale. The company has a market share of more than 50% in the field of railway intelligent command and dispatching and will fully benefit from the industry dividend.
Investment suggestion: we predict that the EPS of the company in the next three years will be 0.22, 0.28, 0.37 yuan respectively, corresponding to PE24.2x/19.3x/14.6x. The company's performance fluctuates in the short term affected by the epidemic, but the industry trend and fundamentals of the company have not changed. As the leader in the field of railway intelligent command and dispatching, the company directly benefits from 5G-R application, and the industry boom is expected to last for 5 ~ 15 years. The company has long-term growth, and the current valuation has advantages, maintaining the "buy" rating.
Risk tips: new technology research and development is not as expected; 5G-R progress is not as expected.
