China Sports Science & Technology (603679): Expected performance expected to double in Q3

Event description Recently, the company released the third quarter report of 2019.

On January 9, 2019, the company realized revenue5.

25 ppm, an increase of 40 in ten years.

05%; net profit attributable to mother is 0.

80 ppm, an increase of 70 in ten years.

At 06%, the net profit after deducting non-attribution to mother was 0.

80 ‰, an increase of 95 in ten years.


Incident Comment Single-quarter revenue and performance nearly doubled, and cash flow improved significantly: in the single quarter, the company achieved revenue2.

12 ppm, a 108-year increase.

82%; net profit attributable to mother is 0.

30 ppm, an increase of 96 in ten years.

41%, single Q3 revenue performance nearly doubled.

The company’s smart street light orders accelerated growth, and its revenue share continued to increase, driving the improvement in gross profit margin.

The company achieved a gross profit margin of 37 in the first three quarters.

61%, an increase of 4 per year.

27 pct, single-quarter gross margin of 35.

39%, an annual increase of 0.

37 points.

Affected by the price control of some project owners, the gross profit margin in the third quarter alone fell by 4%.

91pct, still within a reasonable range of fluctuations.

The company strengthened the collection, and the net cash flow from operating activities in the third quarter was -0.

19 trillion US dollars, the cash flow may be narrowed. Considering that government projects generally receive large amounts of cash before Q4 and the Spring Festival, it is expected that the company’s Q4 cash flow will still improve.

Plenty of smart street light orders solidify the future high-growth tone: Benefiting from the 武汉夜网论坛 accelerated acceleration of the domestic smart street light market, the company gradually transformed from small-scale demonstration zone projects to large-scale transformations. The company’s smart street light orders have grown rapidly, and currently have about 1.6 billion orders in hand.

Affected by the accounting policy and the timing of the company’s project acceptance, the company’s construction in progress cannot recognize the current revenue according to the project progress part, resulting in a mismatch between the revenue growth rate and the size of the orders in hand. With annual implementation, with the continuous heavy volume of new long-term orders in the future, the revenue recognition method is further improved, and the company’s future performance will continue to grow at a high rate.

The 5G construction wave is about to rise, helping China Sports to transform from products to operations: The domestic 5G construction wave is about to rise, and core cities and second- and third-tier cities have issued smart street light construction plans to meet the needs of 5G light pole stations.

The company cooperates with HKUST to accumulate core technology reserves, increase competition barriers, joins hands with Tencent’s smart city IoT portal, and deeply binds Huawei to benefit from the wave of 5G small base station construction. In the future, it will realize the transition from traditional street lamp vendors to smart city operators and 5G base stations.The transformation of supporting manufacturers is expected to break through the shackles of traditional industry estimates and enjoy the valuation premium of technology stocks.

Investment suggestion: The company currently has ample orders for smart street lights, and its performance has broken out.

  We expect the company to return to its parent net profit for 2019-2021.

4.2 billion, 2.

1.1 billion, 3.

1.2 billion, corresponding to PE 36 times, 24 times, 16 times.

  Risk Warning: 1.

Smart city, 5G construction is less than expected; 2.

Traditional urban road lighting and landscape lighting orders fell short of expectations.