Keyuan Wisdom (002380) Company dynamic comment: Third quarter report performance is slightly lower than expected, optimistic about the long-term development of the Industrial Internet

Keyuan Wisdom (002380) Company dynamic comment: Third quarter report performance is slightly lower than expected, optimistic about the long-term development of the Industrial Internet
Core point of view The third quarter performance was slightly lower than expected, and growth has improved: the company achieved operating income in the third quarter of 20191.75 ppm, an increase of 24 in ten years.37%; net profit attributable to shareholders 佛山桑拿网 of the listed company is zero.2 billion yuan, an annual increase of 6.7%; net cash flow from operating activities is 0.13 ppm, a 64-year increase of 64.90%.The company achieved operating income in the first three quarters of 20194.8.3 billion, an increase of 22 in ten years.49%; net profit attributable to shareholders of the listed company is zero.85 ppm, a 10-year increase of 16.70%; net cash flow from operating activities is zero.380,000 yuan, an increase of 64 in ten years.03%.The overall performance maintained rapid growth, in line with expectations.The company’s gross profit margin for the third quarter of 2019 was 37.81%, basically stable compared with the same period last year.At the same time, the company’s expense ratio increased in the third quarter compared with the second quarter. The sales expense ratio, management expense ratio, research and development expense ratio and financial expense ratio were 9 respectively.86%, 6.40%, 9.18%, -2.29%, an annual increase of 1.40pct, 0.59 points, 1.89pct, 0.At 92pct, the increase in the expense ratio during the period is ultimately the increase of the company’s R & D investment and sales investment, which led to the increase in the sales expense ratio and the R & D expense ratio.  Strengthen R & D investment and actively promote the smart industry: For many years, Keyuan Wisdom has been committed to promoting technological innovation and application innovation.At present, the company has accumulated more than 200 authorized patents and more than 300 software copyrights.Relying on the basics, it has launched subdivided solutions such as “smart industry”, “smart energy” and “smart city” to become a leader in diversified smart industries.At the same time, the company continued to increase R & D investment to maintain the company’s technological leadership. The company’s R & D personnel accounted for 40%. In the third quarter, the company’s R & D expenditure was 1659.370,000 yuan, accounting for 9% of operating income.18%.On the afternoon of June 29, 2019, Keyuan Wisdom EmpoworX Industrial Internet Platform conference was successfully held. In the new round of industrial transformation, Keyuan Wisdom strengthened promotion, innovative research and development, and took the lead in launching EmpoworX Industrial Internet Platform, actively exploring manufacturing upgrades.The new development model of industrial interconnection continues to lead various industries to achieve smart upgrades, helping the manufacturing industry to reach new heights.  Winning the bid for a new project, the future development is expected: The company is identified as a company that enjoys preferential benefits from key software companies in the national planning and layout.The corporate income tax rate will be adjusted from 15% to 10% for emerging companies. As a result, the new policy of 75% of research and development expenses will be replaced to support the company’s development policy.  At the same time, the company continued to win new projects in the third quarter, which is expected in the future.The company successfully won the smart factory project of Shaanxi Energy Linbei Power Generation Co., Ltd. As the first smart factory project of Keyuan Co., Ltd. in the northwestern region, it will help Keyuan’s smart power plant business spread across the country and gradually build a model of smart factory leading developmentengineering.Keyuan Wisdom also has strong own strength, and won the bid for the Datang Pingluo Luo smart plant project to further expand its leading edge. This project is also the Group’s implementation of the “158” strategic plan, and is an important deployment for the construction of the “Belt and Road” initiative of the Ningxia Hui Autonomous Region.  Investment suggestion: We predict that the company’s EPS for 2019-2021 will be 0.55 yuan, 0.65 yuan and 0.75 yuan, corresponding to PE is 26 times, 22 times and 19 times.Maintain the “Highly Recommended” rating.  Risk reminders: macroeconomic policy risks; increased market competition risks; brain drain risks; and downstream capital tightening risks.

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