1. Overview of events
On August 1, 2021, the company announced that the joint tender formed by its Spanish subsidiary Teltronic and Telef ó nica Telecom won the bid for the emergency communications network project in Aragon province of Spain and signed a formal contract with a project amount of 10.6107 million euros (about 81.44 million yuan).
2. Comments: the number of orders has increased significantly, and the company's operation is expected to come out of the trough. this project will build the first phase of emergency communication network for the Spanish province of Aragon, including TETRA network covering the whole province, as well as part of LTE broadband network, and provide command and dispatching system, terminal products and follow-up network operation services.
According to the company announcement, the number of major contracts announced by the company in 2020 is only 3, all in the second half of 2020, and six major contracts have been announced one after another from August 1, 2021 (including Shenzhen Metro, Brazilian Federal Road Police, Central Asian industry partners, etc.). Compared with the same period last year, orders improved greatly compared with the same period last year, indicating that the company's performance will be greatly improved.
3. The company's Q2 operation has been normalized and its profitability has been greatly improved.
The company announced its semi-annual performance forecast on July 15. Due to the relief of overseas epidemic situation, the company's business gradually resumed. The net profit of single Q2 company returned to its parent was 14.3649 million yuan to 49.364 million yuan, an increase of 168.4%, 822.4% over the same period last year, and the performance improved significantly.
After the second quarter, the daily activities of government departments, enterprises and institutions, industry and commerce of various countries gradually resumed, the company's broadband / 5G, public college integration and other new business began to make substantial breakthroughs, and newly signed orders increased significantly compared with last year.
4. According to the judgment of the company's announced orders, the company's Q3-Q4 performance is expected to continue to reverse: it will continue to lose money in the third and fourth quarters of 2020 and in the first quarter of this year, and the company is expected to bottom out in the second half of the year, which will continue to improve compared with the same period last year.
5. Investment suggestions
Optimistic about the company's leading position in the private network, with the overseas epidemic relief, the company's business is expected to continue to recover, domestic rail transit, 5G, public security network and other demand is also expected to drive the company's basic people to improve.
To keep the profit forecast unchanged, the estimated net profit from 2021 to 2023 is 400 million yuan, 490 million yuan and 600 million yuan, corresponding to the current price of 20.3 PE 16.7 yuan 13.7 times, maintaining the "overweight" rating.
6. Risk hint
The overseas epidemic situation continues to repeat, customer orders are not sustainable, the Sino-US science and technology war leads to the instability of the company's supply chain, and the patent dispute with Motorola requires large compensation.