Beijing Egova Co.Ltd(300075) (300075)
After 20 years of deep cultivation in smart city, "driverless + aiot" promotes the transformation of business model
The company was established in 2001 and has been deeply engaged in the field of smart city for 20 years. In December 2021, the company announced that it would launch L4 level Zhilian grid car with "driverless + aiot" technology as the core, and the business model ushered in important changes. From 2007 to 2020, the compound growth rate of income exceeded 30%; The level of operating net cash flow continued to improve and was higher than the level of net profit for three consecutive years.
The smart city has changed from construction to operation, and the digital base is expected to become an important basis for grasping operation opportunities
According to IDC data, China's smart city market expenditure will reach US $26.6 billion in 2020 and is expected to exceed US $40 billion by 2023, with a compound growth rate of more than 15% from 2020 to 2023. However, from the perspective of demand structure, under the guidance of policies such as "Digital China", the focus of smart city has shifted from construction to operation. Under the general trend, the importance of urban digital base is prominent. Companies with deep accumulation are expected to base themselves on digital base and grasp more upper level operation opportunities.
The advantages of urban digital base construction and smart pipeline are expected to benefit from policy promotion
Traditional fields: the company has been deeply engaged in the field of grid management for 20 years. It is a leading enterprise in the field of grid management in China. The company has covered more than 200 prefecture level cities and more than 1000 county-level cities and districts, and has established urban operation data service branches in more than 100 cities. Many projects have been in service for more than ten years, laying an important foundation for layout and operation.
Emerging areas: policy promotion, smart pipelines and other businesses usher in development opportunities. The "moderately advanced infrastructure investment" was written into the document of the central economic work conference, and the demand for urban pipeline renewal and transformation is expected to continue to be released. The company has accumulated hundreds of projects and is expected to benefit from the industry trend. At the same time, new technologies such as GIS are actively deployed and combined with business to generate new vitality.
"L4 driverless + operation" promotes the transformation of the mode to SAAS and opens a new chapter of development
"L4 driverless + operation" promotes the transformation of the company from project system to SaaS mode. The company is about to launch L4 intelligent driving vehicle for urban operation. Its business model has begun to change to annual payment and payment according to workload, with SaaS transformation potential. At the same time, L4 driverless is also expected to help continuously optimize labor costs. Calculation of the future space of the company's operation business: the company's relevant annual demand is conservatively / neutral / optimistic, which is estimated to reach 2 / 43 / 8.2 billion yuan. The expansion of operation business will open up new space for the company's growth.
Investment advice
The company has achieved a high share in the field of smart city, and the digital base capability has become an important basis for transformation; In the future, it is planned to launch "L4 driverless + operation" and change the mode to SaaS, which is expected to usher in the double rise of performance and valuation and open a new chapter of development. It is estimated that the EPS from 2021 to 2023 will be 0.42/0.51/0.65 yuan, and the corresponding PE will be 32x, 26x and 21x. Select Iflytek Co.Ltd(002230) , Dhc Software Co.Ltd(002065) , Taiji Computer Corporation Limited(002368) , Pci Technology Group Co.Ltd(600728) , Ropeok Technology Group Co.Ltd(688619) as comparable companies. The average PE of relevant companies from 2021 to 2023 is 40x, 29x and 23x. The company has valuation advantages, is covered for the first time, and is rated as "recommended".
Risk tips:
The company's new technology promotion is less than expected; There is some uncertainty about the impact of the epidemic situation; Industry competition intensifies.
