Fire Communications (600498): Operators’ sector growth is weak, maintaining a neutral level

Fire Communications (600498): Operators’ sector growth is weak, maintaining a neutral level

The 3Q results are in line with our expectations of the company’s first three quarter results: revenue 177.

75 ppm, a ten-year increase2.

32%; net profit attributable to mother 6.

19 ppm, 10-year average1.


In the third quarter of 19, the company achieved revenue of 57 in the single quarter.

90 ‰, ten years ago 6.


Net profit attributable to mother 1.

92 ppm, an increase of 16 in ten years.


We maintain the company’s neutral rating and the company’s performance is in line with our emerging expectations.

Development Trend The company’s gross profit margin rose to 24 in the single quarter.

78%, an increase of 1 per year.

59ppt, up 7 from the previous month.

07ppt, driving a 10-year gross profit and achieving a chain growth of 0.

02 ppm and 1.

7.6 billion.

The company’s expense ratio is well controlled, and the sales and management expenses in the single quarter have been reduced by 11% and 12%, respectively, reflecting the company’s efforts in throttling.

R & D expenses have been maintained in an orderly manner, with an annual increase of 7%, which reflects the company’s R & D investment in 5G, chip and other fields.

Operating profit reached 2.

09 million yuan, an increase of 20% in ten years.

The company’s balance sheet remained stable, but accounts receivable increased to 97.

25 trillion, an annual increase of 42%; short-term loans4.

55 ppm, a year-on-year increase of 207%; the increase in inventory shows that the company is preparing for 5G and other products before delivery.

We believe that due to the increase in capital expenditures of cable network expansion in 2019, operators do 淡水桑拿网 not have large-scale tenders for 5G cable networks. Therefore, the company is facing pressure on revenue growth of fiber optic cable and optical equipment boards, and it has become an information market.Support for company growth.

There are pressures to achieve equity incentive goals during the year.

In 2020, the construction of the 5G bearer network is about to start. We expect that the amount of 10G PON will increase. The optical fiber and cable market is expected to gradually maintain stability and increase, driving the company’s business development. In the information market, servers and other products are expected to achieve growth and network security.The growth rate of products due to the size of the inventory may decrease.

We think the above changes will be mainly reflected in 2H20.

Earnings forecast and 杭州桑拿网 estimation As the scale construction of 5G cable network is yet to be started and the fiber optic cable business is under significant pressure, we have lowered the company’s net profit forecast for the company in 19/20 by 15% / 10% to 9.


2.6 billion.

It currently corresponds to 19/20 years 32.

9 times / 27.

7 times price-earnings ratio.

Maintain Neutral rating and lower TP by 5.

8% to 28.
83 yuan, corresponding to 35.
6 times 2019 P / E ratio and 30.

0 times 2020 price-earnings ratio, compared with the recent merger of 8.

2% upside.

Venture operators ‘capital expenditures on wired networks exceeded expectations; the fiber optic cable industry is picking up slowly.