I. Overview of events

The company released its semi-annual report on August 25, 2020, with revenue of 760 million yuan, an increase of 134.93% over the same period last year, and net profit of 330 million yuan, an increase of 2995.95% over the same period last year, deducting 320 million yuan from non-net profit, an increase of 2393.67% over the same period last year, in line with the expectations in the previous performance forecast.

II. Analysis and judgment

ETC business boom continues, the front market + extensibility application to become the future focus of the stock market, according to the "speed up the promotion of highway electronic non-stop fast toll application service implementation plan" and other policies, the end of December 2019 national ETC user target for 180 million, while the same period of domestic car ownership for 260 million, ETC in the stock of vehicles is expected to continue to popularize, to promote the company's related business prosperity to continue. In terms of extensible application, the company strengthens the layout under the two application scenarios of highway and city, and the smart parking solution has been tested and tested in Beijing, Guangdong and other provinces. In terms of the preloading market, the company has become a first-class supplier to nearly 40 automobile companies, and is expected to benefit from the popularity of the preloading market in the future.

The continuous layout of vehicle network, the long-term prospect is promising.

With the continuous popularization of 5G and the general trend of the development of vehicle networking, the company gives full play to the advantages of vehicle-road coordination and participates in projects such as intelligent network transportation corridor in Haidian District of Beijing and vehicle-road coordination of Xi'an Space City. At present, the intelligent network connection automobile industry is mainly promoted in the form of demonstration zones and pilot projects, and the participation of typical projects establishes the company's long-term development advantages.

Under the catalysis of policy, dynamic weighing products are expected to be gradually released.

With the popularity of ETC, the illegal overloading pressure in the domestic highway field is also increasing, and the dynamic weighing industry ushered in new opportunities for development. At present, the relevant policies of highway control and off-site law enforcement have been issued in many places in China, and the company has typical products such as off-site law enforcement inspection system. At present, it has communicated and cooperated with key provinces to implement details, and the related products are expected to be gradually released.

III. Investment suggestions

The company is a leader in the field of ETC, benefiting from the continuous release of ETC-related demand and broad long-term prospects in areas such as vehicle networking. The EPS of the company from 2020 to 2022 is 5.04,5.79 and 6.58 yuan, and the corresponding PE is 10x, 9x and 8x.

The average PE of comparable companies Jinyi Technology and Huaming Intelligence in the industry is 10X (Wind consensus). As an industry leader, the company's current valuation is relatively reasonable and covers for the first time, giving a "recommended" rating.

Fourth, risk tips:

The progress of the advance of ETC front installation is not as expected, and the progress of the popularity of vehicle networking is not as expected.