1H21 revenue grew steadily, the enabling industry was digitalized, and the "buy" rating company released its semi-annual report on August 12. 1H21 achieved an operating income of 2.377 billion yuan (yoy+25.07%) and a homed net profit of 42.8249 million yuan (yoy-29.43%), with steady revenue growth, but its financial business customers changed the performance reward period to the second half of the year, resulting in a decline in homed net profit. We continue to value the core advantages of the company's long-term vertical industry accumulation, and are expected to benefit from the improvement of enterprise IT cloud prosperity in the 5G era, resulting in a multi-point blossom in the three major fields of operators, government and finance. We maintain the company's profit forecast and estimate that the EPS for 2021-2023 will be 0.31, 0.43 and 0.59 yuan respectively. With reference to the consistent forecast of Wind, the average PE valuation of A-share comparable company in 21 years is 27.46 times, giving the company a 21-year PE of 27.46 times, corresponding to the target price of 8.51 yuan per share (the previous value is 7.13 yuan per share), maintaining the "buy" rating.
With the development of 5G +, big data and artificial intelligence technology, the demand for industrial digital transformation has gradually increased, the company is a leading comprehensive solution provider for industrial cloud and big data in China, benefiting from the improvement of industry prosperity, 1H21 has achieved steady growth in business income. In terms of business, the revenue of 1H21 government industry and other industries increased by 44.05% and 22.58% respectively, mainly due to the increase in order demand in areas such as national defense, public security, and central enterprises; at the same time, as Huawei's total distributor, the company provided government and enterprise customers with value-added distribution and professional services of ICT products, and the revenue growth rate of network product sales business in the first half was 31.59% compared with the same period last year. Revenue from telecommunications and financial services grew by 0.68 per cent and 0.49 per cent respectively over the same period last year.
The delay in the issuance of financial performance awards is the main reason for the decline in gross profit margin and net profit margin. The net profit of 1H21's financial outsourcing business was 10.1746 million yuan, a decrease of 43.5848 million yuan compared with the same period last year. The main reason is that the payment of performance incentives from customers to the company has been postponed to the second half of the year, and at the same time, the company itself has adjusted its business structure to increase the share of revenue from electric sales. As a result, the gross profit margin of the financial business fell 4.42pct. In terms of expense rate, the company's sales / management / R & D expense rates were slightly optimized in the first half of the year, which were 2.79% (yoy-0.11pct) / 3.32% (yoy-0.04pct) / 5.28% (yoy-0.03pct), respectively.
1H21 has a comprehensive gross profit margin of 15.03% (yoy-2.21pct) and a net profit margin of 2.52% (yoy-1.76pct). Considering that corporate communications and government industry revenue settlement are mostly concentrated in the second half of the year, we expect the company's full-year net profit margin to pick up.
The ability of cross-industry is gradually demonstrated, and the digital transformation of enabling industry
Based on big data's analytical technology and cloud-network convergence capabilities deposited in the telecommunications industry, the company has gradually realized cross-industry replication capabilities, and made use of its technical capabilities in cloud, big data, artificial intelligence and Internet of things to expand financial, government, military and other markets. it has made market, qualification and product breakthroughs, and its enterprises have mature products and solutions in cloud, intelligent customer service, intelligent retail, business travel services and other fields. It has the ability of large-scale development and Saas operation, which has laid the foundation for the follow-up rapid development.
Risk hint: operator 5G construction progress is lower than expected, government and enterprise project revenue recognition delay.