I. 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, and communication network optimization services), system solutions, sales of communication network equipments, and Internet of Things (IoT) platform and integration services. Internet platform and integration services.
In the first half of 2020, the company realized operating income of 995,361,100 yuan, a decrease of 18,084,400 yuan compared with the same period of the previous year of 1,176,203,500 yuan, a year-on-year decrease of 15.38%, the decrease in operating income is mainly due to the fact that BETE Health is no longer included in the scope of consolidation in the current reporting period. The company realized gross profit amounted to 13,228.54 million yuan, compared with the same period of the previous year 16,501.07 million yuan decreased by 32,725,300 yuan, a year-on-year decrease of 19.83%; gross profit margin of 13.29%, a year-on-year decrease of 0.74 percentage points, the consolidated gross profit margin is basically the same as the same period of the previous year.
The company realized total profit of 19.74775 million yuan, a decrease of 8.9631 million yuan compared with 28.7107 million yuan in the same period of the previous year; realized net profit attributable to shareholders of listed companies of 18.2561 million yuan, a decrease of 8.7785 million yuan compared with the same period of the previous year of 27.0346 million yuan, and net profit attributable to shareholders of listed companies after deduction of non-recurring gain or loss of 8.1977 million yuan, a decrease of 8.7785 million yuan compared with the same period of the previous year. 8,197,700 yuan, compared with the same period last year 13,874,700 yuan, a decrease of 5,670,000 yuan, the first half of the company to achieve the net profit attributable to shareholders of listed companies after deducting non-recurring gains and losses is mainly due to the subsidiary Tianhe Hongcheng reported a decline in net profit.
2, the company's business review
(1) the main business
During the reporting period, the company's management in accordance with the requirements of the board of directors, adhere to the "service + product" development strategy to ensure that the company's main business of the sound and sustainable development. In terms of communication network technology services, the Company's comprehensive maintenance business has been carried out in 13 provincial companies of China Mobile, and at the same time superimposed on the maintenance business of China Unicom, China Telecom and China Tower. During the reporting period, the continuation of new contracts for integrated maintenance services in Guangdong, Liaoning and Guizhou provinces of China Mobile and integrated maintenance in Shandong province of China Tower was ensured and the market share was expanded; the integrated maintenance service project of China Telecom in Inner Mongolia was expanded. Network engineering services business actively expanding operators provincial and municipal transmission pipeline construction, indoor distribution integration construction, equipment installation construction and broadband and government access construction projects, to maintain stable business growth; communications network optimization business market using signaling big data technology to launch the high-end network optimization service platform, won the bidding of China Mobile Aspire Subsidiary, the China Mobile Design Institute of the network optimization projects in nine provinces and other businesses.
In terms of system solutions, the company won the bidding for Guangdong Mobile's electronic bid evaluation room operation support project, the 404 fine sales navigation channel construction project, the user's in-depth behavioral identification and labeling project based on signaling data, Zhongshan Mobile's video monitoring project in 2020, Guangdong Mobile's network big data capability open platform project, and the 2020 5G operation and carry-over business opportunity mining services.
In terms of vendor business, the company has established technical service business cooperation with Ericsson, Huawei, Nokia, ZTE and other major equipment manufacturers, of which Huawei's and ZTE's business revenue is growing faster.
In terms of IoT, the company insists on taking the IoT platform as the core, and plowing into intelligent industry, smart city and other industry applications. The IoT business of our grandson company, Aiyun Information, provides China Unicom with IoT connection management platform and industry operation solutions, platform maintenance, technical support, personnel training and other IoT operation services through strategic cooperation with Jasper. The Company launched standardized IoT solutions such as smart firefighting, smart sewing and smart photo meter reading. After signing a strategic cooperation agreement with Xi'an Standard Industry Co., Ltd. in 2018, the two sides launched in-depth cooperation in technical services, product provision, resource **** enjoyment, etc., to give full play to the advantages of their respective resources, and join hands to explore the optimal management mode of sewing equipment + Internet, to promote the landing of IoT solutions in the sewing industry. With the landing of "Zhiyun" intelligent sewing production line in Xuzhou, the project has been well developed and well received by manufacturers, and the business is expanding well, and 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 bidding of Shenzhen SAR Construction Development Group Limited multi-functional intelligent pole project, multi-functional intelligent pole pole body by carrying municipal lighting, 5G micro base station, surveillance cameras and other hardware, set intelligent lighting, intelligent transportation, intelligent parking, intelligent charging and other functions as a whole, the company is mainly to provide the pole body foundation, electric power and communication pipelines, cables and other ancillary facilities for the construction and installation of work; pole body The company mainly provides pole foundation, electric power and communication pipeline, cable and other supporting facilities construction and installation work; pole, equipment cable and other materials and equipment procurement, transportation and on-site construction, commissioning and other work.
(2) Changes in gross profit margin
In the first half of 2020, the Company's consolidated gross profit margin was 13.29%, a year-on-year decrease of 0.74 percentage points compared with the same period of the previous year at 14.03%. The consolidated gross profit margin was basically the same as that of the same period of the previous year, with changes in the gross profit margins of various specialties: ① communication network technical services business, in the face of unfavorable factors such as the continued low bidding prices of operators, strict control of cost budgets and the new crown epidemic at the beginning of the year, the Company, on the one hand, arranged for the resumption of work in a timely and orderly manner under the premise of making good security measures for its personnel, so as to minimize the loss of workload during the epidemic; and, on the other hand, continued to strictly implement the On the other hand, the Company continued to strictly implement the "Management Program of Comprehensive Project Evaluation System" and the "KSF Performance Management System", strengthened the control of cost expenditure and realized cost reduction and efficiency enhancement. Meanwhile, the state relieved the difficulties of enterprises and gave certain social security reduction and exemption preferential policies, so the gross profit margin of the network maintenance service business increased. ② Internet of Things business, due to the grandson company Aiyun information and China Unicom, Jasper signed a new phase of the Internet of Things platform service contract settlement standard adjustment, gross profit margin declined.
In the face of the changes in the market environment, the company will actively take countermeasures, by actively expanding its business, expanding the market scale, optimizing the allocation of project resources, enhancing the company's refined operation and management level by strengthening the construction of the IT system support, improving the production efficiency, and creating a low-cost operation capability, in order to lay a solid foundation for the company's future development and consolidate its competitive advantages.
(3) The progress and impact of important R & D projects
The main R & D projects of the company in the first half of 2020 are as follows:
Second, the risks faced by the company and countermeasures Risks faced by the company and countermeasures for the company's future operations adversely affect the important risk factors, the company's operations of the main difficulties and the company intends to take countermeasures. 1, market competition risk: communications technology services industry to the centralization of the trend of development, market competition intensified, telecommunications operators on the level of communications services technology and management level of the requirements continue to improve, bidding conditions are increasingly high, if the company can not follow up in a timely manner to meet customer demand and changes in the market, the future will be faced with greater pressure of competition in the market. Countermeasures: The Company will strengthen the construction of service system in the regional market, and at the same time, closely follow the changes in the policy, planning and industrial chain pattern of the operators, strengthen the cooperation with various specialized companies of the operators, and enhance its market competitiveness through the implementation of the strategy of service plus products. Meanwhile, it will endeavor to develop new business fields and markets to reduce the risk of over-dependence on a single market. 2、Management Risk: Since the implementation of the strategy of service plus products, the continuous expansion of the company's business area, business type and personnel scale has put forward higher requirements on the enterprise organization mode and management means. If the company's management level cannot quickly adapt to the needs of the development and change, it will lead to the reduction of efficiency, which will bring negative impact on the company's development. Countermeasures: The company will continue to introduce management talents, optimize the enterprise management mode and organizational structure, improve the company's management ability and promote the benign development of the enterprise business. 3. Risk of business innovation of the company: In addition to maintaining the stable and sustainable development of its main business, the company is actively expanding to big data, intelligent medical care, Internet of Things and other businesses. The new industry has a large investment in research and development, rapid changes in demand, team building and management requires a new system. If the company fails to continue to invest, keep up with the latest development trend of the industry, and convert R&D results into products in a timely manner, it will face the risk of investment loss. Countermeasures: The company actively follows up the development of new generation information technology, accelerates the research and development of network services and product upgrading, actively introduces talents in new fields, and adopts incentives such as employee stock ownership plan and equity incentive plan to stimulate the creativity of core employees. 4, customer price reduction risk: the communications industry after years of rapid growth, the current revenue growth rate continues to slow down, communications operators own market competition has intensified. The company's main customers there is the pressure to reduce cost expenditure, communications operators and equipment vendors to reduce the price of service outsourcing, reduce service projects, resulting in the risk of a decline in the company's gross profit margin. Countermeasures: The Company will expand multiple carrier projects in the same region through the construction of regional operation support and localized service system to seek benefits from scale, on the other hand, strengthen the system and index control to enhance cost control, improve the comprehensive productivity of personnel, integrate upstream and downstream resources, control the cost, and reduce the impact of customers' price cuts on the gross profit margin. 5. Risks caused by the epidemic: the outbreak of the new coronavirus epidemic in early 2020 has brought certain impact on the company's maintenance, engineering and system solution business. Due to the closed communities and traffic control around the world, it has led to the extension of the engineering work period, the completion rate of the maintenance work order is low, and the deployment of system solutions has lagged behind, which has caused certain impact on the company's operation in the half-year. Countermeasures: Under the correct leadership of the Party and governments at all levels, the Company has made every effort to ensure the smooth flow of the communication network, overcame many difficulties, and initiated the resumption of work and production, and at present, except for the impact of a few projects, the production of most of the other projects has been fully resumed. During the epidemic, the company's R & D projects also contributed to the government in the dynamic control of the epidemic. 6, performance compensation risk: according to the 2018 Beitai Health "Special Audit Report" issued by Lixin and the agreement on performance compensation in the "Agreement on the Purchase of Assets by Issuing Shares and Paying Cash" signed by the company and Fang Yanlin, the original shareholder of Beitai Health, etc., the party committing to the performance compensation should pay the compensation to the company in accordance with the agreement. At present, all the shares acquired by Fang Yanlin and Li Peiyong in the transaction have been pledged and frozen in rotation, and there is a risk that the performance compensation payment of the Company will not be recovered. Countermeasures: The company will request the performance compensation commitment party to effectively fulfill the performance compensation commitment according to the relevant agreement, and communicate and supervise the specific way of repaying the performance compensation payment, the source of repayment and the repayment time; at the same time, the company will rely on the performance of the final performance compensation commitment to recover the company's performance compensation payment through lawsuits and other means after the end of the criminal case.
Third, the core competitiveness of the analysis As a professional company in the information technology industry, the company has been serving the operators and equipment vendors, for a number of domestic carriers to provide communications network engineering and construction, maintenance, optimization, communications equipment sales and integrated system solutions and other services. In recent years, the business field to expand the research and development and manufacturing of communications equipment, IoT platform development and operation, IoT vertical applications, the company's core competitiveness has been further strengthened, as reflected in the following aspects: 1, R & D and innovation capacity further enhancement The company has been focusing on the research of communications network technology and the development of communications software and hardware products, and continue to increase investment in R & D. In 2020, the company's R & D investment has increased from 1.5 billion yuan to 1.5 billion yuan. From January to June, the Company's R&D investment*** amounted to RMB35,579,000, accounting for 3.57% of the main business revenue. As of June 30, 2020, the number of intellectual property rights of the Company (including subsidiaries) was as follows: 14 invention patents authorized, 47 invention patents under application; 14 utility model patents obtained, 1 utility model patent under application; 3 design patents obtained, 1 design patent under application; 85 registered trademarks; and 299 authorizations for software copyrights. In 2020, the company will focus on 5G edge computing technology, 5G network architecture, 5G wireless signaling and core network key technology research, 5G soft and hard picking 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 update and iteration of 5G soft and hard acquisition signaling decoding technology and service recognition capability provide strong support for related business requirements. 5G NFV data gateway has completed product development, and the functional test, performance index, and power consumption index have been benchmarked and tested to meet the operator's index requirements, and the performance index exceeds the specification requirements by more than 20%, and the power consumption index exceeds the specification requirements by more than 40%, which is a good opportunity for the company to participate in operator project bidding in 5G signaling decoding. This will provide support for the company to participate in 5G signaling decoding project bidding of operators. IOT Research Institute is conducting research on the architecture of IOT platform and improving the functions of DMP self-developed platform. At present, V1.0 and V1.5 of the platform have been successfully cut over and put on line, the message retention problem of the platform has been solved, the platform's southward access capability (the ability to manage the interfaces of other manufacturers' network management or equipment) has been improved, and the front-end of the platform's V2 version's system management is already being optimized. Meanwhile, the integration of streaming media and live broadcasting services and APP development have been completed, and the docking with mainstream platforms such as Hikvision (002415) and Dahua is in progress. The AI image recognition capability has part of the basic AI application capability, and is expected to empower gateways and platforms through AI technology to enhance the application capability of specific scenes and increase the added value of products. In terms of intelligent hardware research has achieved a series of research results, successful development of 5G router, prototype test stability, the next step will continue to complete the productization of 5G router, start the development of 5G gateway. Meanwhile, the prototype of Unicom devicewise gateway has been completed and docked with the Unicom Telit platform; the prototype of Unicom operation and maintenance positioning and patrolling equipment has been completed and passed the test, and the typical use case of Unicom Edge Cloud has been completed, and the application of visual inspection in the automated inspection of industrial products has been researched and developed and successfully deployed to the Unicom MEC laboratory. The oil machine monitoring system has been successfully deployed in over 500 oil machine monitoring terminals in more than 20 cities across the country, escorting Yitong Group's safety production work, further building up the safety defense line, and safeguarding the Group's safety production. In terms of business identification, IOT Research Institute's research on network traffic identification based on dynamic depth recognition technology also completed the optimization of the core program for business identification, with processing performance increased by 25% after optimization, and business identification iteration capability increased by 50% compared with last year. The business identification capability has gained a big leap and maintained the leading position in the industry. The Company's research and development of automatic piece counting algorithms for sewing equipment, automatic data collection devices, and intelligent production management system achieved a leading position in the industry. In the first half of 2020, the "New Generation Artificial Intelligence" major science and technology project "Neurodegenerative Disease Early Intelligent Early Warning Advanced Machine Learning Technology and Demonstration Application", which was jointly declared with the Institute of Computing of the Chinese Academy of Sciences in the first half of 2020 for the Guangdong Provincial Key Fields Research and Development Program for the period of 2018-2019, completed the submission of the relevant information for mid-term evaluation In April 2020, the Company declared the special project of promoting high-quality development funds (high-end software and information technology) for the industrial and information technology industry in Guangzhou and successfully obtained government funding for research and development In June 2020, the Company completed the submission of the acceptance evaluation data system by the Guangdong Provincial Department of Science and Technology on the recognition of Guangdong Provincial Engineering and Technology Research Centers for 2018 and passed the acceptance evaluation by the Guangdong Provincial Department of Science and Technology in July. In July, the company passed the acceptance review of the Guangdong Provincial Science and Technology Department. in the first half of 2020, the company's product sales, engineering construction and maintenance, and IoT platform integration projects related to the electric power industry amounted to 15; and 13 projects in video monitoring and smart canteen solutions. Reasonable strategy and business layout The overall strategic layout of the company is to implement the strategy of "service + product", actively expand new regions and emerging business markets, adhere to the equal emphasis on services and products, and move forward from the field of communication products and services to the Internet of Things, big data and other emerging information service areas, to create "I-Tongue Century" information technology services. Yitong Century" information technology service brand. The company's business layout is reasonable, and the business direction, business area and market space can be expanded rapidly, laying a solid foundation for future development. Around the company's strategic layout, the company also set up an industrial investment fund, along the 5G industry chain of equipment, services, applications and other areas of early investment. 3. Good brand image The company pays great attention to the brand and company image, maintains the quality of services and products, and has an excellent and stable customer base after years of efforts. The company actively participates in various public welfare activities organized by the government and civil society, operates in good faith, pays attention to information disclosure, and answers investors' questions in a timely and accurate manner. During the outbreak of the new coronavirus, the Company firmly fulfilled its corporate social responsibility, prioritized the interests of the society, and fully supported the country to win the battle. The Company, as the maintenance unit of Hubei Mobile and Hubei Unicom networks, undertook an exceptionally important task in this invisible battle. In order to curb the spread of the new coronavirus pneumonia epidemic, the government of Ezhou City, Hubei Province decided to refer to the model of "Xiaotangshan", and remodeled and expanded the epidemic prevention and control wards on the basis of the old hospital area of the Third Hospital. Hubei branch of the company took the initiative to take the responsibility, under the coordination of the government, and put all efforts into the construction of communication facilities of the third hospital in Ezhou. Facing the epidemic, the company's project team in Ezhou braved difficulties and went deep into the scene of the disaster area, actively cooperated with Ezhou "Xiaotangshan" hospital transmission, 4G/5G opening, and made every effort to guarantee the communication network of key areas and isolated hospitals, and demonstrated "Ezhou Mobile" for Ezhou "Xiaotangshan" hospital. Ezhou Mobile Speed" was demonstrated for Ezhou "Xiaotangshan" Hospital. In the most serious epidemic in Wuhan, the company's Wuhan project team in the face of expanding epidemic, traffic control, community closure, psychological pressure and other difficult situations, they stand firm at their workplaces, go forward, work hard, regardless of personal gains and losses, overcome the difficulties, and make every effort to ensure that the mobile network operates normally, especially the communication network in the key areas of the medical operations normally, and practice the mission of the communications with their youth and blood. Advantages of Market and Channel 4, the advantages of the market and channels The original main customer of the company's communications services business is China Mobile, in recent years, the main business has entered China Unicom, China Telecom, China Tower and other operators in the scope of cooperation, the new market share of the business and the geographical area continues to expand; in addition, the company's cooperation with equipment manufacturers also expanded from Ericsson, Nokia to Huawei and ZTE. The main customers cover the current major domestic operators and domestic and foreign main equipment vendors, the company's business scope covers the country's major provinces and cities, with strong market and channel advantages, effectively enhance the company's marketing efficiency and after-sales service, for the future of the company's more incubated products into the market to lay the market foundation. This year, the company is actively expanding government and enterprise customers, municipal business, and operators together to expand a number of government and enterprise customers, extending the market space and channels.