Main points of investment:

Nantian Information issued a "notice to terminate the acquisition of 90% of the equity of Beijing Karakal Technology Co., Ltd.", all the uncertainties should have landed! In the previous report, we made it clear that "risk warning: additional issuance and programme uncertainty need to be further clarified."

The subsequent announcement withdrew the rights issue (and will continue to declare the rights issue after implying that the offering will be revised) and terminated the acquisition of 90% of Caracal's stake. All the additional issues and the uncertainty of the plan should have been landed, and investors should find that there is no more uncertainty (or negative).

What is determined is the additional issuance plan to improve incentives and implied profit returns. 1) the original SEO is 1.11 billion, the investment payback period of project 1 (software development and service system construction for small and medium-sized banks) is 4.7 years, and the investment payback period of project 2 (solution and application software development projects) is 5.0 years. The average annual report of the two projects is 250 million yuan after implied production. 2) after the withdrawal of the rights issue on September 5, it was clearly announced that "the follow-up will be arranged after the completion of the improvement of the investment project raised by this non-public offering". It is a common practice in the industry to provide convincing evidence of profit returns attached to the report. 3) the plan that the company continues to try to pass contains two certain signals: improving incentives, and the implied profit return is more and more certain! What is determined is the acquisition strategy, and the superficial twists and turns will become the point of investment. 1) on the one hand, the announcement of termination of the acquisition indicates that "there are great differences on matters such as the terms and progress of payment of this transaction", which is different from the statement of the pre-disclosure plan of the acquisition announced on July 12. Investors can reasonably speculate that the differences may be difficult to realize the profit terms, the intention of the two parties to change, and so on. Ending acquisitions of risky assets is good for the fundamentals of the company. 2) on the other hand, Nantian Information's high profit return implies a continuous acquisition strategy, and superficial twists and turns will become the point of investment. For example, the announcement of Hande Information on May 27, 2014, the announcement on the termination of major asset restructuring and stock resumption, and the announcement on the termination of major asset restructuring and stock resumption on January 10, 2014, the termination plan is only the beginning of a continuous extension strategy, followed by a continuous performance of the stock price. Hande Information once announced that it was up 21% three days after the termination of the acquisition (finally, its software announced on July 23, 2014 that it planned to plan major events and complete major asset restructuring, and Hande Information announced the issue of shares to buy assets on January 28, 2015). Based on this, it can be inferred that the acquisition twists and turns of Nantian Information is a similar situation.

With a sense of urgency in the rhythm of time, investors can speculate on more positive fundamentals. The incentive and acquisition of Nantian Information implies a sense of urgency: 1) the announcement of the additional draft on March 15 and the approval of SASAC on April 21. The amendment was announced on July 27 and the approval of SASAC was announced on August 11. 2) the announcement will be withdrawn on September 6 after the approval of SASAC on August 11 (and implied that it will be reported after improvement). 3) in accordance with the usual practice, the proposed acquisition of Karakal shares shall lag behind the additional issuance, and the company will directly announce the termination of the acquisition without waiting for the additional issuance to be clear (the company may reasonably choose to announce it later). The urgent handling of many of the above implies a tight time window for capital operation matters. Investors can reasonably expect more positive fundamentals in the operation of capital. Many optimistic growth signals have implied a reversal in profits. 1) the impairment loss in 2015 was 43.69 million yuan, including 23 million yuan in bad debts and 16.57 million yuan in intangible assets. 2) the gross profit margin has risen for two years in a row, which shows that the proportion of software business has increased. 3) Karakal hinted at the beginning of a continued acquisition. Maintain the "overweight" rating and maintain profit forecasts. It is estimated that the operating income of the company from 2016 to 2018 is 22.60,25.39 and 2.731 billion yuan respectively. The net profit from 2016 to 2018 was 21 million, 52 million and 57 million respectively.