Events:

According to the company's annual report, by the end of 2016, the total operating income was 594 million yuan, an increase of 46.45% over the same period last year; the net profit of shareholders belonging to the parent company was 56.93 million yuan, up 28.08% from the same period last year; and the net profit of non-parent was 48.83 million yuan, an increase of 21.36% over the same period last year. Among them, the company's Q4 quarter performance increased significantly, achieving operating income of 293 million yuan, an increase of 92.32% over the same period last year, and net profit of 37.24 million yuan, an increase of 35.86% over the same period last year.

Viewpoint:

The company's revenue has obvious seasonal characteristics, so there is no need to worry too much about the pre-loss in the first quarter of 2017. The company disclosed a forecast of results for the first quarter of 2017, showing a net profit loss of 4 million yuan to 8 million yuan, an increase of 206.94% and 513.87% over the same period last year. Due to the obvious seasonal fluctuations in the company's business, there is little difference in costs and period expenses from quarter to quarter, but the operating income and the corresponding sales rebate in the first quarter are significantly lower than those in other quarters, resulting in a profit loss in the first quarter. At the same time, the company's implementation of restricted stock amortization is also included in the cost in the first quarter, the amount is about 5.5775 million yuan, which has a great impact on the company's performance in the first quarter.

The information economy continues to prosper and a good environment for development is improved. In the 13th five-year Plan, the government has put forward the grand goal of achieving a total output value of more than 12 trillion of the new generation of information technology industry by 2020. At the same time, according to the data of the "Software and Information Technology Service Industry Development Plan 2016-2020" of the Ministry of Industry and Information Technology, the business income of software and information technology service industry is expected to exceed 8 trillion yuan in 2020, with an average annual growth rate of more than 13%. The company is committed to a number of industries of software applications and information solutions and other products, will benefit from policy support to ensure further growth.

Invest heavily in strengthening technological innovation and maintain the company's leading position in technology. In the development wave of cloud computing, big data, Internet + and intelligence, the company continues to strengthen technological innovation, keep up with the technological development trend of the industry, and maintain the company's leading technological competitiveness in the industry. The company added 49 software copyrights at the end of 2016, covering big data, intelligent applications, "Internet +" logistics, industry applications and smart city fields.

By the end of 2016, the company had obtained a total of 146 computer software copyrights. Leading technical strength and continuous R & D innovation maintain the company's leading position in the industry, which is conducive to the sustained growth of the company's performance.

Diversified coverage of telecommunications and other five key industries, expanding the scope of product application continues to be bigger and stronger. The company focuses on industry application software, big data application platform and solutions and other business, deeply ploughing telecom, power, finance, transportation, government and other key industries. (1) in the telecom industry, the company closely revolves around the three core customers China Telecom Corporation, China Mobile Limited and China Unicom, providing them with OSS operation support software and telecom application integration platform, and becomes the core supplier of the operation support system of the three. (2) in the power industry, the company maintains good and stable cooperation with high-quality customers such as State Power Investment Group, China Resources Power Holdings Holdings, China Datang Group, Jiangsu Power Grid Company, Wanneng Electric Power, etc., and successfully expanded Nan Rui Group and other new customers in 2016; (3) in the financial industry, on the one hand, the company has directly signed with the end-user Nomura Comprehensive Research Institute of Japan, and the scale of business has been greatly improved. On the other hand, the company actively expands the domestic market and has reached cooperation with Guoyuan Securities, Guoyuan Insurance and other companies; (4) in the transportation industry, the company is based in Anhui, continue to build and promote cloud computing data center, traffic comprehensive management system and open administrative law enforcement management software three independent software products (5) in the government field, the company builds the government big data platform for core customers such as Anhui Provincial Development and Reform Commission, Anhui Economic and Information Commission, Anhui Department of Education, Guiyang Development and Reform Commission. The diversified layout and the accumulation of high-quality customers in five key industries have established a good reputation for the company. In the future, the company will concentrate resources in 2-3 sub-industries to continue to become bigger and stronger and become the leading company in the industry.

Smart lamppost products help build a smart city, and Internet + 's intelligent logistics cloud service platform has great potential. The company participated in the establishment of CLP (Shanghai) Public facilities Operation and Management Co., Ltd., whose smart lamppost products integrated new energy vehicle charging posts, networked monitoring, public broadcasting, location alarm (one click for help), environmental monitoring, information exchange, public WiFi and 4G/ 5G micro base stations and other functions, which can provide strong support for the construction of a smart city. At the same time, centering on the strategic layout of "Internet + Logistics", the company carried out the research and development of the intelligent logistics cloud platform by the holding subsidiary Huitong Interconnection, and launched the Huilian logistics sharing platform. The product Internet + intelligent logistics + cloud service model brings new profit growth space for the company.

Conclusion:

It is optimistic that the company will be based on long-term experience, technology and customer accumulation, ensure investment in technological R & D and innovation, seize development opportunities in telecommunications, transportation, government and other industries, and continue to expand and strengthen market segments and seize market share. At the same time, the company is optimistic about the innovation and upgrading of products following the development trends of big data platform, intelligence, cloud services and so on. From 2017 to 2019, the company is expected to achieve operating income of 7.65,9.51 and 1.151 billion yuan, net profit of 0.69,0.86 and 104 million yuan, EPS of 0.72,0.89 and 1.08 yuan respectively, and corresponding PE of 119.04, 96.28 and 79.56 times respectively.

Risk Tips:

The development of the industry is not as expected; technological innovation is not as expected.