[Industrial Science and Technology News] Feifei's profit is insufficient, but can the profit of 500 million prop up 80 billion market capitalization? 】 As "the first unit of artificial intelligence", every move of HKUST Telecommunications Co., Ltd. has always been highly regarded by the market.
Recently, HKUST announced an unsatisfactory 2017 “results reportâ€, and for the first time since its listing, there has been a drop in net profit. Judging from the various financial indicators, the gold content of HKUST's financial performance is greatly reduced. What are the main causes of this situation?
As we all know, expendable R&D expenditures will affect the profits of the current period. Capitalized R&D expenditures will be amortized in the future, while the proportion of the capitalized R&D expenditures of HKUST’s information technology is high. Then, what kind of measures will HKUST adopt to respond to the impact of capitalized R&D expenditures on future profits?
In response to the above issues, the "Investor" reporter interviewed relevant personnel of the University of Science and Technology, and received a partial reply.
Insufficient profit
From the data of HKUST's 2017 annual report, operating income was about 5.445 billion yuan, a year-on-year increase of 63.97%, the largest increase since listing; the net profit attributable to shareholders of listed companies was about 435 million yuan, a decrease of 10.27% from the previous year. This is the first time that HKUST has seen negative growth in net profit since the company was listed on the Internet.
It is understood that HKUST acquired a 23.2% stake in Anhui Xunfei at a price of 101 million yuan in March 2016, and soon acquired 100% of Beijing Lezhixing with a total of 496 million yuan. In the 2017 annual report, the net profits of the two companies were approximately 140 million yuan and 0.49 billion yuan respectively, which accounted for 29.25% and 10.24% of the total net profit of listed companies, respectively, which together reached 39.48%. In other words, the company has a consolidated profit of 39.48%, together with a government subsidy of 24.84%, which actually accounted for 64.32% of the profits of HKUST, and after mergers and subsidies, HKUST Profits are still falling.
It is precisely for this reason that the industry has always been of the opinion that HKUST’s "profit is insufficient". Apart from M&A and government subsidies, which contributed most of the profits, the accounts receivable and inventory of HKUST’s Telecommunications Group also increased in different proportions.
Judging from the financial statement data of recent years, ITF’s accounts receivables have grown rapidly, which usually means that the company’s cash flow efficiency has been reduced, bringing with it even greater risks of bad debts. From 2013 to 2017, the receivables of HKUST's Xunfei were RMB 675 million, RMB 1.192 billion, RMB 1.43 billion, RMB 1.798 billion and RMB 2.552 billion, respectively. In this regard, HKUST’s directorate secretary Jiang Tao explained that the main accounts receivable customers come from large-scale industrial customers such as the government, telecom operators, banks, etc., and have implemented strict bad debt accrual policies.
R & D investment hidden mystery
In response to the declining performance in 2017, relevant personnel of HKUST reported in an interview with the “Investor†reporter: “In 2017, HKUST has added more than one billion gross profit, which will change if there is no increase in investment. Profits: The newly added gross profit was used to strengthen the layout of market channels, the construction of delivery service systems, and the core technologies to maintain a high level of investment.In 2017, the company’s sales expenses increased by 71.31%, R&D investment increased by 61.5%, and the company’s strategy in the above areas. The layout has led to a large increase in current R&D and market costs, which has affected the increase in after-tax profits."
The data of HKUST’s 2017 financial report showed that the sales cost was RMB 1.111 billion, an increase of 71.31% year-on-year; the investment in research and development was RMB 1.145 billion, an increase of 61.61% year-on-year.
It is worth noting that, of the 1.145 billion yuan invested in R&D, the R&D investment capitalized by HKUST was approximately 549 million yuan, a ratio of 47.95%. This data is also higher than its peers. Take the UFIDA Network, the company invested Rmb1.072 billion in R&D in 2017, which is not much different from that of HKUST. However, capitalized R&D investment is only 138 million yuan, accounting for only 12.87%.
“The increase in capitalized R&D spending was mainly due to the rapid growth of R&D expenses as the industry developed. Our R&D investment accounted for more than 20% of sales revenue for five consecutive years, which should be said to be a state of high investment. Fly is a high-tech software company with a large R&D investment, and is currently in the window of a key strategic opportunity for the development of the artificial intelligence industry. The company’s application of artificial intelligence technology in education, justice, and medical fields is booming, and R&D investment has increased. It is conducive to the long-term development of the company, "Corporate correspondents told reporters.
In spite of this, the market parties have always been very concerned about the phenomenon that the investment in R&D of the capitalization of HKUST is relatively high. Some industry insiders believe that expen- sive R&D spending is a factor that affects current profit, while capitalized R&D expenditures can be amortized in the future; if the R&D investment capitalization rate of a company is high, the result is increased current-period profits, but it will generate The amortization will reduce future profits, which will result in the consequences of “eat foodâ€.
The AI ​​road no longer stands out
From the 2017 financial report, HKUST’s products are increasingly diversified, and its main business involves more fields, including education and education, smart cities, law and law, open platform and consumer services, automotive, and intelligence. Seven major businesses such as services and other businesses.
In terms of products, HKUST has core technologies such as speech recognition and AI technology. It is worth noting that, as far as the current market is concerned, HKUST is no longer single in voice technology.
Although HKUST has been rooted in the AI ​​market for more than a decade, BAT, the three giants of the Chinese Internet, has been entering the voice technology field since 2015. Whether it is voice technology or the layout of cars, education, and medical imaging, BAT is all over the place.
It is understood that BAT and other enterprises with technical strengths, the relevant product's voice recognition rate has reached more than 95%. Although there is still a gap between the recognition rate and the HKUST flight, there is also the possibility that these companies will meet or even surpass the ITF technology level in the short term with the investment in funds, technology, and talent.
According to Wu Yihong, an AI commercialization strategy expert, BAT and HKUST are very different from each other. BAT's entry into the artificial intelligence business or industry is based on the advantages of big data. This is in line with the law; while HKUST has adhered to technological innovation in many aspects. The core of the game has always been around the technical level. On the one hand, voice is a key entry point for future artificial intelligence. On the other hand, compared to other giants, the accumulation of the users of the HKUST Telecommunications Group and the construction of application scenarios are more alienated. Therefore, despite the fact that the Chinese voice technology market has occupied more than 60% of the market share, in the face of the “delivery†in which Baidu’s voice technology is permanently free, the future voice and AI road of HKUST’s voice will not be accomplished overnight.
On the other hand, as the first unit of artificial intelligence in the A-share market, HKUST’s share price has already soared. However, according to industry insiders, HKUST News is a typical case in the market relying on the government to subsidize profits. Its share price and its products are split.
As of April 19, the total market value of HKT Telecom was 80.266 billion yuan, with a P/E ratio of 184.66 times. Less than 500 million yuan in profit support, more than 80 billion market value can go far? This is the need for investors to continue to pay attention to the issue.
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