Main points of the report
Event description
On April 28, 2016, Hengbao released its first quarterly report for 2016. according to the report, the company's operating income in the first quarter of 2016 was 382 million yuan, up 3.49 percent from the same period last year. The net profit belonging to shareholders of listed companies was 58.69 million yuan, up 6.91 percent from the same period last year. The net profit attributed to shareholders of listed companies was 56.32 million yuan, an increase of 14.22 percent over the same period last year. In addition, the company issued a forecast for its 2016 semi-annual report, which is expected to increase its net profit by 0% in the first half of 2016 compared with the same period last year.
Event comment
Card issuance continues to increase, supporting steady revenue growth: overall, the company's operating revenue grew steadily in the first quarter of 2016, mainly because the company's smart card shipments continued to grow, providing a strong support for the company's overall revenue growth. The main reason for the increase in net profit is that while the revenue increases, the company continues to strengthen the control of production and manufacturing costs, effectively dealing with the negative impact of the decline in smart card prices, resulting in an overall gross profit margin of 2.29 percentage points higher than the same period last year. The steady improvement of profitability provides a solid guarantee for the company's performance growth.
The smart card industry has maintained a high boom, and new business has developed steadily: we reiterate that the smart card industry in which the company's main business is located remains high, and the smart card business remains the main source of revenue and performance. In addition, the company's new business has developed steadily, specifically: 1. In the field of security terminals, the sales of tax control panels have maintained a rapid growth trend. Internet payment terminals have become the main shortlisted suppliers of Agricultural Bank Of China, China Construction Bank and Everbright Bank. MPOS has passed the UnionPay network test and will become a new profit growth point for the company. 2. In the field of mobile payment, the company provides overall mobile payment security solutions, including eSE, TEE, HCE, Bluetooth Key, wearable payment devices, etc., and the future development is worth looking forward to.
Implement the "Internet +" strategy and build a service platform for small and medium-sized and micro merchants: the company continues to implement the "Internet +" strategy. Specifically, in July 2015, the company acquired a 45.66% stake in Shenzhen Yika Yi. Access to its member management system and resources of small and medium-sized and micro merchants 2. In December 2015, the company revised the Dingzeng plan and proposed to raise an additional 1.08 billion yuan for the construction of the service network and system of small and medium-sized micro-businesses, the acquisition of 51% equity interest in Shenzhen Yika Yi, and the research, development and industrialization of the overall solution of mPOS. 3. In December 2015, the company's Shanghai Hengli Investment plans to use 15 million yuan to participate in Hansi Anxin to acquire its 8.333% equity stake in order to strengthen the information security business. It can be found that the company continues to improve the layout, laying the foundation for it to build a small and medium-sized business operation service platform and carry out the "Internet + Finance" and "Internet + Business" business model.
Investment suggestion: we are optimistic about the company's future development prospects, and it is estimated that the company's fully diluted EPS from 2016 to 2018 will be 0.68,0.85,1.05 yuan respectively, reiterating the "buy" rating.