Event: the company issued a half-year profit forecast for 2020. Net profit is expected to be 119 million yuan to 138 million yuan, an increase of 85% to 115% over the same period last year. The epidemic led to the rapid penetration of cloud video business and the outbreak of demand for teleconference, live video broadcast and so on.
In the first half of the year, due to the epidemic of COVID-19, the demand for mobile teleconferencing, online education, telecommuting, video collaboration and other explosive growth, product penetration increased significantly. The business of cloud video and cloud conference in the company's corporate communications business increased significantly compared with the same period last year, and the income from changes in fair value after the listing of the capital online increased significantly, leading to high growth in the first half of the year.
The "video +" strategy is the focus of development, and the B side has a broad application prospect. The company has put forward a "video +" strategy to fully enter the main track of cloud video conferencing. Through the model of "cloud + end + industry", video technology is deeply integrated with the inside and outside of the enterprise to empower the upstream and downstream ecological chain of the industry and the enterprise. Especially in education and corporate live broadcast has made the most significant progress. The "263 Education" industry solution covers all the application needs of distance education from four major products, namely, live online school, large class classroom, small class classroom and double teacher classroom. Corporate Live is also serving more than 1000 large and medium-sized enterprises around the world. We believe that in the 5G era, the "video +" strategy will open up the company's growth space.
The progress of overseas epidemic control is slow, which is a drag on personal business development in North America. The company's iTalkBB is the leading brand in the overseas Chinese market in North America. In addition to home phone, Chinese TV and high-speed network, the company's business portfolio extends its services to mobile phone card business, VIP electronic mall and other product lines. World Health Organization (WHO) warned on July 13 that the epidemic was getting out of control in North and South America. Among them, more than 3.35 million have been diagnosed in the United States, and more than 135000 people have died of novel coronavirus. The deterioration of the epidemic in North America has brought difficulties to the company's business, while the economic downturn has also reduced the level of household consumption, which has been a drag on the company's operations in the first half of the year.
Investment suggestion: we forecast that the company's net return profit from 2020 to 2022 will be 236 million / 275 million / 323 million yuan respectively, corresponding to 0.17 EPS 0.20 pound 0.24 yuan, maintaining the "overweight" rating, and the target price is 8.50 yuan.
Risk hint: the growth of special chips and super SIM cards is not as expected, and FPGA research and development is not as expected.
