Yitong Century (300310)’s 2020 semi-annual board of directors’ operating review contains the following contents:
1. Overview
1. Overview of the company’s operations
The company's main business covers communication network technology services (communication network engineering services, communication network maintenance services, communication network optimization services), system solutions, communication network equipment sales, Internet of Things platforms and integration services.
In the first half of 2020, the company achieved operating income of 995.3611 million yuan, a decrease of 180.8424 million yuan from 1.1762035 million yuan in the same period last year and a year-on-year decrease of 15.38%. The main reason for the decrease in operating income was the During the reporting period, Beta Health was no longer included in the scope of consolidation. The company achieved a gross profit of 132.2854 million yuan, a decrease of 32.7253 million yuan from 165.0107 million yuan in the same period last year, a decrease of 19.83% year-on-year; the gross profit margin was 13.29, a decrease of 0.74 percentage points year-on-year. The comprehensive gross profit margin was 13.29 yuan, a decrease of 0.74 percentage points year-on-year. Basically the same.
The company achieved a total profit of 19.7475 million yuan, a decrease of 8.9631 million yuan from 28.7107 million yuan in the same period last year; a net profit attributable to shareholders of the listed company was 18.2561 million yuan, a decrease of 28.7107 million yuan from the same period last year. , a decrease of 8.7785 million yuan from 7.0346 million yuan. The net profit attributable to shareholders of the listed company after deducting non-recurring gains and losses was 8.1977 million yuan, a decrease of 5.677 million yuan from 13.8747 million yuan in the same period last year. In the first half of the year, the company achieved The main reason for the decrease in net profit after deducting non-recurring gains and losses for shareholders of listed companies is the decrease in net profit of subsidiary Tianhe Hongcheng during the reporting period.
2. Company business review
(1) Main business
During the reporting period, the company’s management adhered to the development of “service products” in accordance with the requirements of the board of directors strategy to ensure the steady and sustainable development of the company’s main business. In terms of communication network technical services, the company's comprehensive maintenance business has been carried out in 13 provincial companies of China Mobile, and it also superimposes the maintenance business of China Unicom, China Telecom and China Tower. During the reporting period, the continuation of new contracts for China Mobile's comprehensive maintenance services in Guangdong, Liaoning, and Guizhou provinces and China Tower's comprehensive maintenance contracts in Shandong was guaranteed, and the market share was expanded; China Telecom's comprehensive maintenance service projects in Inner Mongolia were expanded. The network engineering service business actively expands the operator's provincial and municipal transmission pipeline construction, indoor distribution integration construction, equipment installation construction and broadband and government-enterprise access construction projects to maintain stable business growth; the communication network optimization business market utilizes signaling big data technology Launched a high-end network optimization service platform, and won the bid for network optimization projects of China Mobile Aspire subsidiary and China Mobile Design Institute in nine provinces.
In terms of system solutions, the company won the bids for the Guangdong Mobile Electronics Bid Evaluation Room Operation Support Project, the 404 Fine Sales Navigation Channel Construction Project, the User In-depth Behavior Identification and Labeling Project Based on Signaling Data, and the Zhongshan Mobile 2020 2020 video surveillance project, Guangdong Mobile Network Big Data Capability Open Platform Project, 2020 5G operation and transfer business opportunity mining services and other projects.
In terms of manufacturer business, the company currently has established technical service business cooperation with major equipment manufacturers such as Ericsson, Huawei, Nokia, and ZTE. Among them, the business income of Huawei and ZTE has grown rapidly.
In terms of the Internet of Things, the company insists on taking the Internet of Things platform as the core and deeply develops applications in smart industries, smart cities and other industries. Sun's company Aiyun Information's IoT business has entered into strategic cooperation with Jasper to provide China Unicom with IoT connection management platform and industry operation solutions, platform maintenance, technical support, personnel training and other IoT operation services. The company has launched standardized IoT solutions such as smart fire protection, smart sewing, and smart photo meter reading.
After the company signed a strategic cooperation agreement with Xi'an Standard Industry Co., Ltd. in 2018, the two parties have carried out in-depth cooperation in technical services, product provision, resource sharing, etc., giving full play to their respective resource advantages, and jointly exploring the best of the Internet of sewing equipment Management model promotes the implementation of IoT solutions in the sewing industry. With the launch of the "Zhiyun" smart sewing production line in Xuzhou, the project has developed well and has been well received by manufacturers. The business has expanded well. It is currently being implemented in Jiangsu, Zhejiang, Guizhou, Jiangxi and other places, and other projects are also in the demonstration stage. . During the reporting period, the company won the bid for the multifunctional smart pole project of Shenzhen Special Economic Zone Construction and Development Group Co., Ltd. The multifunctional smart pole body integrates smart lighting, smart transportation, and smart parking by carrying a variety of hardware such as municipal lighting, 5G micro base stations, and surveillance cameras. , smart charging and other functions. The company mainly provides the construction and installation of supporting facilities such as pole foundations, power and communication pipelines, cables, etc.; the procurement, transportation, on-site construction, and debugging of materials and equipment such as poles, equipment cables, etc.
(2) Changes in gross profit margin
In the first half of 2020, the company's comprehensive gross profit margin was 13.29, a year-on-year decrease of 0.74 percentage points from 14.03 in the same period last year. The comprehensive gross profit margin is basically the same as that of the same period last year, and the gross profit margin of each major has changed: ① In the communication network technology service business, in the face of unfavorable factors such as continued low operator bidding prices, strict cost budget control, and the COVID-19 epidemic at the beginning of the year, the company has continued to On the one hand, on the premise of ensuring the safety of personnel, we arranged for the resumption of work in a timely and orderly manner to minimize the loss of workload during the epidemic; on the other hand, we continued to strictly implement the "Project Comprehensive Evaluation System Management Plan" and the "KSF Performance Management System" , strengthen cost and expenditure control to achieve cost reduction and efficiency improvement. At the same time, the state has alleviated the difficulties of enterprises and granted certain preferential policies for social security exemptions and exemptions. Therefore, the gross profit margin of the network maintenance service business has increased. ② In the Internet of Things business, due to the adjustment in the settlement standards of the new Internet of Things platform service contract signed between Sun Company Aiyun Information and China Unicom and Jasper, the gross profit margin has declined.
In the face of changes in the market environment, the company will actively take measures to actively expand business, expand market scale, optimize project resource allocation, and strengthen the construction of IT system support to improve the company's refined operation management level. Improve production efficiency and build low-cost operation capabilities to lay a solid foundation for the company's future development and consolidate its competitive advantages.
(3) Progress and impact of important R&D projects
The company’s main R&D projects in the first half of 2020 are as follows:
2. Risks and responses faced by the company Measures: Risks faced by the company and countermeasures: Important risk factors that will adversely affect the company's future operations, major difficulties in the company's operations and countermeasures the company intends to take. 1. Market competition risk: The communication technology service industry is developing towards a centralized trend, market competition is intensifying, telecom operators have continuously increasing requirements for communication service technology and management levels, and bidding conditions are getting higher and higher. If the company cannot follow up in time, Due to changes in customer needs and market, we will face greater market competition pressure in the future. Countermeasures: While strengthening the construction of regional market service systems, the company will closely follow changes in operator policies, plans and industrial chain patterns, strengthen cooperation with operators' professional companies, and enhance its market competitiveness through the implementation of a service plus product strategy. . At the same time, efforts will be made to explore new business areas and markets to reduce the risk of over-reliance on a single market. 2. Management risk: Since the company implemented the service plus product strategy, the company’s business areas, business types and personnel scale have continued to expand, which has put forward higher requirements for the company’s organizational model and management methods. If the company’s management level cannot quickly adapt to the needs of development and changes, , will lead to a reduction in efficiency and have a negative impact on the company's development. Countermeasures: The company will continue to introduce management talents, optimize the corporate management model and organizational structure, enhance the company's management capabilities, and promote the healthy development of corporate business. 3. Risks in the company’s business innovation: In addition to maintaining the stable and sustainable development of its main business, the company is actively expanding into big data, smart medical, Internet of Things and other businesses.
New industries require large investments in R&D, rapidly changing demands, and require new systems for team building and management. If the company cannot continue to invest, keep up with the latest development trends in the industry, and transform R&D results into products in a timely manner, it will face the risk of investment losses. Countermeasures: The company actively follows the development of new generation information technology, accelerates research and development of network services and product upgrades, actively introduces talents in new fields, adopts employee stock ownership plans, equity incentive plans and other incentive measures to stimulate the creativity of core employees force. 4. Risk of price reduction by customers: After years of rapid growth in the communications industry, current revenue growth continues to slow down, and communications operators’ own market competition has intensified. The company's major customers are under pressure to reduce costs and expenditures. Communication operators and equipment manufacturers have lowered service outsourcing prices and reduced service items, resulting in the risk of a decline in the company's gross profit margin. Countermeasures: The company will expand multiple operator projects in the same area through the construction of regional operation support and localized service systems, seeking benefits from scale. On the other hand, the company will strengthen system and indicator control to improve cost control and improve the overall productivity of personnel. , integrate upstream and downstream resources, control costs, and reduce the impact of customer price cuts on gross profit margins. 5. Risks caused by the epidemic: The outbreak of the new coronavirus in early 2020 has had a certain impact on the company's maintenance, engineering and system solution business. Due to closed communities and traffic control in various places, the project construction period has been extended and the completion rate of maintenance work orders has been relatively low. Low, the deployment of system solutions has lagged behind, which has had a certain impact on the company's semi-annual operations. Countermeasures: Under the correct leadership of the party and governments at all levels, the company has gone all out to ensure the smooth flow of communication networks, overcome numerous difficulties, and initiated the resumption of work and production. At present, except for individual projects that have been affected, most other project production has resumed. During the epidemic, the company's R&D projects also contributed to the government's dynamic control of the epidemic. 6. Performance compensation risk: According to the 2018 Beta Health "Special Audit Report" issued by Lixin and the agreement on performance compensation in the "Agreement on Issuing Shares and Paying Cash to Purchase Assets" signed by the company and the original shareholder of Beta Health Fang Yanlin and others, performance compensation The party committing to compensation shall pay compensation to the company as agreed. At present, all the stocks obtained by Fang Yanlin and Li Peiyong in the transaction have been pledged and frozen, and there is a risk that the company's performance compensation cannot be recovered. Countermeasures: The company will require performance compensation commitment parties to effectively fulfill their performance compensation commitments in accordance with relevant agreements, and communicate and supervise the specific methods, sources and time of repayment of performance compensation; at the same time, the company will treat the performance compensation commitments as final In this case, after the criminal case is concluded, the company's performance compensation money may be recovered through litigation and other methods.
3. Core competitiveness analysis As a professional company in the information technology industry, the company has been serving operators and equipment vendors, providing communication network engineering construction, maintenance, optimization, and communication equipment sales for many domestic operators. and integrated system solutions and other services. In recent years, the business areas have expanded into the R&D and manufacturing of communication equipment, the R&D and operation of IoT platforms, and the application of IoT vertical fields. The company's core competitiveness has been further strengthened, which is specifically reflected in the following aspects: 1. R&D and Innovation capabilities are further enhanced. The company has been focusing on the research of communication network technology and the development of communication software and hardware products, and continues to increase investment in research and development. From January to June 2020, the company's R&D investment totaled 35.5079 million yuan, accounting for 3.57% of its main business income. As of June 30, 2020, the number of intellectual property rights of the company (including subsidiaries) is as follows: 14 invention patents are authorized and 47 invention patents are being applied for; 14 utility model patents have been obtained and 1 utility model patent is being applied for; It has obtained 3 design patents and is applying for 1 design patent; 85 registered trademarks; and 299 software copyright authorizations. In 2020, the company will focus on launching 5G edge computing technology, 5G network architecture, 5G wireless signaling and core network key technology research, 5G software and hardware signaling decoding platform and NFV data collection product research, 5G intelligent operation and maintenance technology research, artificial intelligence Image recognition research, 5G intelligent hardware research. Among them, the updates and iterations of 5G software and hardware signaling decoding technology and business identification capabilities provide strong support for related business needs.
The NFV data gateway has completed product development. Functional tests, performance indicators, and power consumption indicators have been benchmarked and tested, and all can meet the operator's indicator requirements. The performance indicators exceed the specification requirements by more than 20%, and the power consumption indicators exceed the specification requirements by more than 40%, which is a good example for the company in the future. In terms of 5G signaling decoding, we will participate in operators’ project bidding to provide support. The Internet of Things Research Institute is conducting research on the Internet of Things platform architecture and is improving the relevant functions of the DMP self-research platform. At present, the platform V1.0 and V1.5 have been successfully cut over and put online. The message retention problem of the platform has been solved. The platform’s southbound access capability (the ability to manage the interfaces of other manufacturers’ network management or equipment) has been improved. The system management of the platform V2 version has been improved. The front end is already being optimized. At the same time, streaming media and live broadcast service integration and APP development have been completed, and docking with mainstream platforms such as Hikvision (002415) and Dahua is in progress. The AI ??image recognition capability has some basic AI application capabilities. It is expected to empower gateways and platforms through AI technology, improve the application capabilities in specific scenarios, and increase the added value of products. A series of research results have been achieved in the field of intelligent hardware, including the successful development of 5G routers and stable prototype testing. The next step will be to complete the productization of 5G routers and start the research and development of 5G gateways. At the same time, the prototype of China Unicom's devicewise gateway has been completed and connected with China Unicom's Telit platform; the prototype of China Unicom's operation and maintenance positioning line inspection equipment has been completed and passed the test, and the typical use cases of China Unicom's edge cloud have been completed, and the application research and development of visual inspection in automatic detection of industrial products has been completed. And successfully deployed to China Unicom MEC laboratory. The oil engine monitoring system has successfully deployed more than 500 oil engine monitoring terminals in more than 20 cities across the country to protect the safe production of Yitong Group, further build a safety defense line, and ensure the safe production of the group. In terms of business identification, the Internet of Things Research Institute's research on network traffic identification based on dynamic depth identification technology has also completed the optimization of the core program of business identification. After optimization, the processing performance has improved by 25%, and the business identification iteration capability has increased by 50% compared with last year. The company's business identification capabilities have greatly improved and it has maintained its leading edge in the industry. The automatic piece counting algorithm, automatic data collection device, and intelligent production management system for sewing equipment developed by the company have achieved a leading position in the industry. In the first half of 2020, the Guangdong Provincial Key Areas R&D Plan 2018-2019 "New Generation Artificial Intelligence" major science and technology project "Advanced Machine Learning Technology and Demonstration Application for Early Intelligent Warning of Neurodegenerative Diseases" jointly declared with the Institute of Computing Technology of the Chinese Academy of Sciences is on The submission of relevant materials for the mid-term evaluation has been completed in half a year, and the connection with the Internet of Things platform has been completed. In April 2020, the company applied for the Guangzhou City Special Project to Promote High-Quality Development of Industrial and Information Technology Industries (High-End Software and Information Technology) and successfully received government R&D funding. In June 2020, the company completed the submission of the acceptance review data system to the Guangdong Provincial Department of Science and Technology for the 2018 Guangdong Provincial Engineering Technology Research Center certification, and passed the acceptance review of the Guangdong Provincial Department of Science and Technology in July. In the first half of 2020, the company had 15 projects related to product sales, engineering construction and maintenance, and Internet of Things platform integration in the power industry; and 13 projects in video surveillance and smart canteen solutions. 2. Reasonable strategy and business layout. The company's overall strategic layout is to implement the "service products" strategy, actively expand new regions and emerging business markets, insist on paying equal attention to services and products, and move from communication products and services to the Internet of Things, big data, etc. Make strides in the emerging information service field and create the "Yitong Century" information technology service brand. The company's business layout is reasonable, and its business direction, business area and market space have been rapidly expanded, laying a solid foundation for future development. Focusing on the company's strategic layout, the company has also established an industrial investment fund to make early investments along the equipment, services, applications and other fields of the 5G industry chain. 3. Good brand image The company attaches great importance to brand and company image, maintaining the quality of services and products. After years of hard work, it has an excellent and stable customer base. We actively participate in various public welfare activities organized by the government and civil society, operate with integrity, pay attention to information disclosure, and answer investors' questions promptly and accurately.
During the outbreak of the new coronavirus, the company firmly fulfilled its corporate social responsibilities, prioritized social interests, and fully supported the country in winning this tough battle. As the network maintenance unit of Hubei Mobile and Hubei China Unicom, the company assumes an extremely important task in this invisible battle. In order to curb the spread of pneumonia caused by the new coronavirus, the Ezhou Municipal Government of Hubei Province decided to follow the "Xiaotangshan" model and renovate and expand the disease prevention and control ward based on the old campus of the Third Hospital. The Hubei branch of the company took the initiative and, under the overall coordination of the government, went all out to build the communication facilities of Ezhou Third Hospital. In the face of the epidemic, the company's Ezhou project team was not afraid of difficulties, went deep into the disaster area, actively cooperated with Ezhou "Xiaotangshan" Hospital in transmission and 4G/5G opening, and made every effort to ensure the smooth communication network of key areas and isolated hospitals, providing a smooth service for Ezhou "Xiaotangshan" Hospital. Demonstrated "Ezhou moving speed". In the Wuhan area, where the epidemic is most severe, the company's Wuhan project team faced difficult situations such as the epidemic's continuous expansion, traffic control, community closures, and huge psychological pressure. They stuck to their jobs, moved forward courageously, worked hard, and overcame numerous difficulties regardless of personal gains and losses. We make every effort to ensure the normal operation of mobile networks, especially the normal operation of communication networks in key medical areas, and fulfill the mission of communicators with youth and passion. 4. Advantages in the market and channels. The original main customer of the company's communication service business was China Mobile. In recent years, its main business has entered the cooperation scope of operators such as China Unicom, China Telecom, and China Tower. The business shares and geographical areas of new market entries have continued to expand. ; In addition, the company's cooperation with equipment manufacturers has also expanded from Ericsson and Nokia to Huawei and ZTE. The main customers cover the current major domestic operators and domestic and foreign main equipment manufacturers. The company's business scope covers major provinces and cities across the country. It has strong market and channel advantages, effectively improving the company's marketing efficiency and after-sales service, and incubating more companies in the future. Products entering the market lay the foundation for the market. This year, the company has actively expanded government and enterprise customers and municipal services, and worked with operators to expand multiple government and enterprise customers, extending the market space and channels.