Guide to this report:
The performance in '19 was in line with expectations, the optimization of the company's business structure came to an end, and profitability increased markedly. The company insists on 5G as the core and forward-looking to explore opportunities in the Internet of Things and the smart health industry, which is expected to become a new driver for the company's growth.
Investment points:
The target price was raised to 11.00 yuan to maintain the “increase in holdings” rating. In 2019, revenue was 524 million yuan (-46.71%) and net profit was 107 million yuan (-18.11%). The optimization of the company's business structure has come to an end, and profitability has increased dramatically. The company insists on 5G as the core of development, focuses on the Internet of Things and the smart health industry, and enhances development potential with a forward-looking layout. We maintained the company's EPS for 2020-2021 at 0.22 yuan and 0.32 yuan, and added the 2022 EPS forecast of 0.41 yuan. Considering the company's significant benefits from the rise in the prosperity of the Internet of Things and smart health industries, the company was given 50 times PE in 2020, raised the target price to 11.00 yuan (+11.11%), and maintained the “increase in holdings” rating.
The optimization of the business structure has come to an end, further focusing on the IoT business. The company is seizing 5G+ IoT development opportunities, forward-looking layout, optimizing the business structure, and disposing of original non-core and low-profit businesses.
At present, the divestment of related businesses has come to an end, and the optimization of the business structure has brought about a significant increase in profitability, from 37.48% to 55.25%. At the same time, the company is further focusing on 5G network planning and construction and the IoT business sector, opening up the entire 5G life cycle, and is expected to exchange short-term pain for long-term accelerated growth.
Adhere to the integrated development of “industry, education and research” to form computational biotechnology into the smart health industry. Fuzhou Polytechnic's “lecturer+engineer+technical shareholder” collaborative innovation model has achieved remarkable results, especially in the fields of the Internet of Things and health related to the company. At present, the company has developed computational biotechnology by integrating information technology and biotechnology, reducing the cost of building a database of an individual's entire genome to 10% of the industry average. Through cooperation with local governments to establish biotechnology platforms, the company is expected to establish a million-level population genotype database to help accurately prevent and control diseases.
Catalyst: 5G network construction is accelerating, and the IoT industry is being implemented at an accelerated pace
Risk warning: 5G construction falls short of expectations, IoT technology research and development lags behind the market