Event description
On January 22, 2021, the company disclosed a pre-reduction announcement on its annual performance in 2010. the estimated net profit was 81 million yuan to 120 million yuan, a decrease of 91.76% to 87.70% over the same period last year, and a decrease of 94.73% to 90.54% after deducting non-net profit from 50 million yuan to 90 million yuan.
Event comment
International trade frictions affect the operation, Q4 performance turns to a loss again: taking the median of the performance forecast, 2020Q4 expects to return to the mother of the net profit loss of 177 million yuan, is expected to deduct the non-net profit loss of 179 million yuan, turn negative again. We believe that under the influence of international trade frictions, the import of high-end chips of the parent company, including subsidiaries, may be blocked, which in turn affects the normal business operation of the company's 2020H2, and there is also a risk of impairment in asset quality. With the gradual easing of international trade frictions, the ban on the sale of chips in the future may take a turn for the better.
The bargaining of optical fiber and cable collection in 2020 may be the second major factor in the decline in performance: the price reduction of optical fiber and cable collection in 2020 is still serious. In 2020, the number and price of the company's winning bid fell by 51.13% and 23.05% respectively compared with the same period last year. For the whole year, the company's optical fiber and cable business may decline significantly compared with the same period last year, which may be reflected in the impact on revenue and profits.
The incentive mechanism may be reshaped to avoid the loss of the core backbone: on January 21, in order to protect the interests of employees, the company and shareholders, the company terminated the 2018 equity incentive plan and repurchased and cancelled the restricted shares granted. The company said that follow-up or launch other effective incentives, or choose the opportunity to launch a new equity incentive plan to ensure that the core staff of the company will not be lost.
Profit forecast and investment advice: under the influence of international trade frictions, the import of high-end chips in the company's core business may be blocked, which in turn affects the normal operation of the company, and the impact of fiber optic collection bargaining may be reflected in 2020H2, and the company's Q4 performance turns into a loss again. If the performance falls short of expectations, the company may reshape the incentive mechanism to avoid the loss of core backbone. It is estimated that the return net profit of the company from 2020 to 2022 is 0.98,6.04 and 930 million yuan, corresponding to 239,39 and 25 times of PE.
Risk hint
1. International trade frictions continue to intensify
two。 The optical fiber and cable business continues to be under pressure.