The profit growth rate is fast, and the profitability is obviously improved. The main reason for the company to achieve a relatively rapid growth in net profit, which is faster than operating income, is due to the increase in sales revenue while the decrease in management expenses over the same period last year, better cost control and an increase in gross profit margin. In addition, the government subsidy in the company's non-recurrent profit and loss decreased by nearly 10 million yuan compared with the same period last year, so the net profit after deducting non-return increased rapidly, indicating that the company's main performance is improving and its profitability is significantly improved.
The business income of front-end equipment is growing rapidly. During the reporting period, the company's revenue from front-end equipment, back-end products and other business was 32.7078 million yuan, 70.0702 million yuan and 54.4711 million yuan respectively, an increase of 70.42% over the same period last year, a decrease of 3.45% and an increase of 25.92%. The reason for the rapid growth of the company's front-end equipment business is that the company has made great efforts to strengthen the construction of domestic marketing centers in the early stage, which has broken through the market gaps in some provinces for many years. In addition, the order signed between the company and Beijing Zhongjiaoneng in 2014 contributed a large amount of sales revenue in 2015, and the contract had been completed by the end of 2015. The company's revenue still grew in the first half of 2016 compared with the same period last year, and the original business made efforts to make up for the gap.
The ceiling of highway monitoring business is open. The downward economic environment makes the country re-examine the pulling effect of infrastructure construction on economic growth, and has entered the small and most exciting part of infrastructure construction in the past two years. Many provinces have planned 10000 km of highways, and the upgrading of highways from "SD to HD" has also opened the ceiling of the monitoring market, and the growth of the company's original business is worth looking forward to. At the same time, the company is also actively embracing the Internet craze, from the provision of traditional monitoring equipment to content services, video big data mining and other aspects of development, the future is expected to make progress in video analysis and identification.
Profit forecast and investment rating: we estimate that the EPS of the company from 2016 to 2018 is 0.24,0.32 and 0.39 yuan respectively, and the latest share price corresponding to the PE from 2016 to 2018 is 69,52,42 times respectively, maintaining the "overweight" rating.
Risk factors: declining gross profit margin and slow progress of highway WiFi business.
