Work with IBM to develop cross-border blockchain products. The company announced that on February 28th, the company and IBM held a press conference in Hong Kong to sign a business cooperation agreement, and the two sides will cooperate in the field of blockchain. The cooperation includes: (1) the establishment of Sifang Precision Block chain Innovation Center in the company's headquarters; (2) the use of IBM Cloud Computing (IBMCloud) and Design thinking (DesignThinking) for proof-of-concept and testing; and (3) the two parties will form a blockchain expert team to assist customers in solution development. Through this blockchain cooperation with IBM, the company is expected to quickly master blockchain technology, accelerate development in the field of financial technology applications, and promote financial and banking institutions to develop cross-border blockchain innovation applications.

Cooperation plan: carried out in two stages and promoted step by step. For Sifang Splendid, through this cooperation, the company can obtain technical support from IBM experts, including blockchain technology, user experience (UX) design, and cloud architecture; at the same time, in the development of blockchain applications, the company can make full use of HyperledgerFabric and IBMBluemix technology platforms, and deposit the applications in the IBM cloud data center in Hong Kong. The cooperation plan is divided into two stages: (1) the two sides will study and maintain a cross-border case database; work with industry participants to identify suitable application cases; design a set of business blueprints using IBM design thinking method; and combine business blueprints with technical blueprints and transform them into pilot projects. (2) Sifang Fine Trading Block chain Innovation Center will test and develop pilot projects using IBM's "garage approach" (GarageMethod), and integrate different components, including intelligent contracts and blockchain technology, into application to form the "simplest feasible product" (MVP). In addition, the two sides plan to set up a cross-border application case database by completing more similar workshops in the first half of 2017, starting with the first design thinking workshop completed with users from the banking and insurance industries.

The basis of cooperation: the two sides have a solid foundation. (1) in the past two years, IBM has made great efforts to promote the layout of block chain. In 2015, IBM launched its own blockchain IBMBlockchain; in February 2016, and IBM joined the Linux Super Book Foundation (an organization dedicated to building an enterprise-level blockchain framework). In October 2016, IBM's cloud platform Blueminx was launched, based on which it plans to promote the development of blockchain and Internet of things technology, and launch the first cloud-based highly secure blockchain service for blockchain applications, mainly for finance, government and health care. At the same time, IBM is working with UnionPay to create a system based on blockchain technology for points trading services. (2) for Sifang Fine Innovation, the company is also actively promoting the research and development of block chain technology. In May 2016, as one of the sponsors, the company joined the Shenzhen Financial Block chain Alliance and participated in the research of 4 of the 12 topics. it includes: 1) the technical platform at the bottom of the blockchain; 2) the cloud service platform of the blockchain; 3) the blockchain in the integration field; and 4) the application of the blockchain in the primary and secondary market. We believe that the company has been providing professional IT services for large banks, has a professional and profound accumulation of banking business processes, and lays a solid foundation for the application scenarios and product development of blockchain technology. L profit forecast and investment advice. We believe that through this cooperation with IBM, the company is expected to speed up the application of blockchain technology, combined with its own business to rapidly develop blockchain products. At the same time, we believe that the company has a strong operational service capacity in the field of bank IT services, and its performance in the next two years is expected to maintain steady growth on the basis of 49% growth in 2016. We estimate that the EPS of the company from 2016 to 2018 will be 0.73, 0.98, 1.20 respectively. With reference to comparable companies in the same industry, the company is given a dynamic PE75 times in 2017 with a 6-month target price of 73.20 yuan. Cover for the first time, giving a "buy" rating.

Risk hint. Block chain technology application development is lower than expected risk, systemic risk.