The company disclosed its 2014 annual report and the 2015 Q1 performance forecast, and the performance inflection point has arrived. In 2014, the company's revenue was 254.3 million yuan, a year-on-year decrease of 12.70%; net profit was 59.69 million yuan, a year-on-year decrease of 8.74%. The reason for the decline in the company's performance was a certain decline in domestic State Grid business.
The company also predicted net profit of 3018 to 33.64 million yuan in 2015 Q1, an increase of 57% to 75% over the previous year.
The most pessimistic period of the company's performance has passed. Foreign business will enter a performance implementation period in 2015, and the company's development will reach an inflection point. For details, please refer to our previous in-depth report.
The company has appointed a new general manager with a background in informatization and information security. The company announced the appointment of Mr. Ding Xiaojian as the new general manager. Ding Xiaojian was the former general manager of Beijing Dehongcheng Company and the vice chairman of Beijing Zhongxiang Borun International Media and Advertising Company. Dehong Cheng is mainly engaged in information system integration services such as intelligent buildings and building automation, and also provides information security products such as “Rhino Bird” and “God of Thunder.” Zhongxiang Borun mainly deals in large-scale domestic outdoor media and high-end regional communication media. The new general manager of the company has rich experience in domestic informatization business, which is both linked and different from Fuxing Xiaocheng's existing business. We believe that under the leadership of General Manager Ding, the company will take the domestic business back to a new level of rapid development and develop new ideas in terms of business layout and R&D direction.
While the company's overseas business performance has been realized, domestic and foreign countries have gone hand in hand.
The long-term inflection point has arrived. In the four years since Fuxingshi, the company's former majority shareholder, went public, its holdings have basically been reduced. The three original directors of Fuxingshi were replaced by middle and senior management of the company, Chairman Cheng Yi became the largest shareholder, and the shareholding ratio was expanded through targeted increases. After a few years of silence, the company moved to a new page, and the forward-looking layout business began to gain strength. The company's loss reduction project in Ghana and the PPP project in South Africa have proven that the corporate model can be replicated in many countries and fields, and that revenue can be continuously superimposed over a long period of time (5-10 years) to bring about continuous rapid growth in performance. The business model is scarce among A-shares.
Investment advice: Buy an -A investment rating. We expect the company's 2015-2017 EPS to be 2.36, 3.90, and 5.12 yuan respectively, giving a target price of 82.60 yuan for 6 months, corresponding to 35 times the 2015 PE.
Risk warning: Overseas country sovereignty risk; exchange rate fluctuation risk; new business development risk, etc.