\u3000\u3000 Hangzhou Arcvideo Technology Co.Ltd(688039) (688039)
Event:
The company issued the announcement on signing major sales contracts for daily operation on the afternoon of January 9, 2022.
Comments:
The company signed a product sales contract with Yichao (Asia Pacific) with a contract amount of USD 17.9317 million. According to the announcement, the company recently signed a product sales contract with Yichao (Asia Pacific) Co., Ltd. on “technical fit out for Al Arab television network wll (lusail tower, Doha Qatar)”. Led by the optimization of program production process, Yichao (Asia Pacific) Co., Ltd. provides a series of consulting, design, integration and maintenance, end-to-end one-stop solutions for enterprises and institutions in many fields. The company will sell a complete set of video processing technology system integrating software and hardware to Yichao (Asia Pacific). The contract is performed overseas (Doha, capital of Qatar), with a contract amount of US $17.9317 million, far exceeding the total tax inclusive contract signed between the company and Yichao (Guangzhou) new media Technology Co., Ltd., a wholly-owned subsidiary of the other party in the past three years.
The company has a good growth, and the performance of the contract is expected to improve its profitability and core competitiveness
The company focuses on the algorithm research of intelligent video technology. At present, it mainly faces the media culture, public security and other industries, and provides industry customers with high-quality, high-performance and high security one-stop intelligent video solutions and video cloud services from the center to the edge. From 2016 to 2020, the company’s operating revenue CAGR was 37.79%, and the net profit attributable to the parent company CAGR was 30.30%. According to the announcement, the performance of this contract will have a positive impact on the company’s operating performance in 2022 and help to improve the company’s sustainable profitability and core competitiveness. At the same time, the implementation of this contract will have a positive impact on the company’s expansion of overseas markets.
The actual controller has increased the shares of the company for many times, which is conducive to the sustainable, stable and healthy development of the company
From June 29, 2021 to December 29, 2021, Mr. Sun Yanlong, the actual controller, chairman and general manager of the company, increased 224500 shares of the company by means of centralized bidding transaction, accounting for 0.28% of the total share capital of the company, with a total increase of RMB 13.047 million. As of December 31, 2021, Mr. Sun Yanlong and his persons acting in concert held 31108200 shares of the company indirectly, accounting for 38.73% of the total shares of the company. The shareholding increase plan reflects Mr. Sun Yanlong’s optimistic outlook for the big video industry, his confidence in the company’s sustainable and stable development in the future and his recognition of the company’s long-term value, which is conducive to improving investor confidence, effectively safeguarding the interests of small and medium-sized investors and promoting the company’s sustainable, stable and healthy development.
Investment advice and profit forecast
The company has profound core technology accumulation in the field of video coding and transcoding. In China, it provides users with overall solutions for media culture and public security for large video industries such as radio and television media, Internet video, education, public security, justice, social security and government. With the continuous expansion of downstream application fields, the company has broad growth space in the future. It is predicted that the operating revenue from 2021 to 2023 will be 491, 678 and 901 million yuan, the net profit attributable to the parent company will be 131, 185 and 249 million yuan, the EPS will be 163, 2.30 and 3.10 yuan / share, and the corresponding PE will be 52.24, 37.00 and 27.47 times. Since listing, the company’s PE has mainly operated in the range of 40-120 times. Considering that the performance of this contract is conducive to improving the company’s sustainable profitability and core competitiveness, the company’s target PE for 2022 has been slightly increased to 45 times, and the corresponding target price is 103.50 yuan. Maintain the “buy” rating.
Risk tips
The R & D and innovation of core technology are less than expected; The progress of product R & D and commercialization in newly developed industries is less than expected; The risk of accounts receivable exceeding the credit period; Market competition intensifies.
