Revenue grew steadily in the first half of 2020, while profits declined. The company released its semi-annual report for 2010. in the first half of 2020, the revenue was 6.523 billion yuan, an increase of 10.26% over the same period last year, and the net profit was 282 million yuan, down 17.60% from the same period last year. Q2 achieved revenue of 3.686 billion yuan in a single quarter, an increase of 10.71% over the same period last year, and a net profit of 169 million yuan, down 24.61% from the same period last year.
The steady growth under the pressure of the epidemic shows the company's core competitiveness. Excluding investment income, the return net profit in the second quarter is growing at a high speed. The global COVID-19 epidemic broke out in the first quarter of 2020, which affected the resumption of production and prosperity in the upper and lower reaches of the electronic industry chain to a certain extent, but the company still relies on its core competitive advantage to achieve steady revenue growth. The slight decline in homing net profit was mainly due to the decline in gross profit margin caused by the epidemic (the company achieved a gross profit margin of 10.59% in the first half of 2020, down 1.8 pct from the same period last year), partial rent reduction, hotel business affected by the epidemic, exchange losses caused by exchange rate fluctuations, special epidemic donations and reduced profits of associated enterprises. In fact, after excluding the investment income of the most important associated enterprises, 2020Q2's single-quarter net profit growth rate was 49.81%, which turned negative to positive compared to 2020Q1.
The company continues to strengthen cost control and improve the quality of operation. The company's sales + management + R & D expenses decreased by 12.65% in the first half of 2020 compared with the same period last year, of which sales expenses and management expenses decreased by 15.82% and 13.23% respectively compared with the same period last year. In addition, the company's accounts receivable and inventory turnover days and the net operating cycle are shorter than the previous month, indicating that the overall operation of the company continues to improve.
Profit forecast and rating. We are optimistic that the company will embrace future opportunities as a distribution leader and realize the growth prospect of the strong Hengqiang. It is estimated that the company's EPS in 20-22 years will be 0.66 EPS 0.82 prime 1.10 yuan, and the corresponding PE 13.99 times. With reference to the valuation of comparable companies, the corresponding 20-year performance is valued at 30 times PE, and the reasonable value of 19.89 yuan per share is given a "buy" rating.
Risk tips. The downward cycle and growth of the electronics industry is not as expected; the progress of 5G is not as expected; the development of emerging areas such as automotive electronics is not as expected; and the industry competition aggravates the risk.
