The boom in the IoT era is rising, and the performance is expected to exceed expectations. For the first time, it will cover “increase ownership” rating companies that are deeply involved in the IoT industry, strategically lay out IoT “terminals+applications” in vertical integration, and are committed to the development of core IoT technologies such as sensing, connectivity, and platforms and the expansion of industry applications. Through successive acquisitions of Tianjin Zhilian, ZTE IoT, Chuanglian Electronics, etc., it focuses on the Internet of Vehicles and high-quality tracks such as smart transportation and smart policing. With the frequent introduction of favorable policies for the Internet of Vehicles, intelligent transportation, and smart policing, the industry is booming and developing; the company's business layout clearly continues to increase investment in R&D. Resource integration is expected to catch up with the trend of development in the Internet of Things era, and business performance is expected to reverse in a V-shape, entering a period of fruitful harvest. We forecast that the company can achieve net profit of 0.94/2.17/334 million yuan in 2021/2022/2023, an increase of 108.6%/129.8%/54.1%, and the EPS is 0.05/0.12/0.19 yuan. The current stock price corresponding to PE is 113.0/49.2/31.9 times respectively. Considering the company's track, the V-shaped reversal of performance, and initial coverage, it was given an “increase in holdings” rating.
The core technology card is clear, and resource integration is focused on the main business entering the harvest period. In the field of Internet of Vehicles and smart transportation, the company is one of the few IoT application enterprises in China with full-stack product coverage, traffic consulting and planning, and large-scale system project delivery capabilities for the Internet of Vehicles; smart policing, the company is fully empowered to build a closed loop in the police business industry chain, with remarkable marketing and sales network advantages; the accumulation of wireless communication and UHF RFID technology helps the company become a leading product and service provider for the global smart city IoT; the company focuses on IoT routes and forward-looking layout strategies Clarity, high investment in R&D ensures continued technological leadership.
2021 will be an important turning point for the company. In 2020, the company accrued 800 million asset depreciation and went to power lightly. Finances were healthier, cost control was implemented, management energy efficiency was improved, and profitability and input-output ratio were increased. The company is in a period of strategic resource integration. Through optimization and adjustment of organizational structure, R&D system, supply chain, management departments, and sales platforms, the company strives to achieve a breakthrough in 2021.
If we don't forget our original intentions, the company's business will soon enter a harvest period, which is expected to lead to a double increase in valuation and performance.
Risk warning: policy risk; risk of income decline due to market fluctuations and overseas epidemics; risk of impairment of goodwill and intangible assets.