2016 performance exceeded expectations
Yiyang ICT announced its 2016 results: operating income was 1.331 billion yuan, up 11.15% from the same period last year; net profit attributed to the parent company was 130 million yuan, up 22.99% from the same period last year, corresponding to 0.223 yuan per share. The net profit of returning home exceeded CICC's expectations by 7.3%. The company's gross profit margin rose 4.9% year-on-year, and net profit grew faster than revenue growth.
Trend of development
Communication software business expands from traditional network management to business management, and to new industries.
The company has formed a full set of business management programs as well as supply chain and project management programs for non-telecommunications industries, winning the bid for Guangxi Radio and Television Wireless Station encouragement, National computer Center Unified alarm platform, Shanghai Oriental Cable, Iron Tower, Agricultural E-commerce and other projects. At the same time, the company's BOSS network management software has been extended to China Mobile online and other customers.
The network excellent service continues to open up and expand the territory. Based on big data, cloud platform and artificial intelligence, the company's network excellent cloud platform and the new network excellent service model have been recognized, and have won the bid for the network excellent market share of 10 provinces including Zhejiang, Shaanxi and Jilin. This business is one of the drivers driving up the company's gross profit margin. 4G network construction has entered the final stage, network optimization has entered the procurement peak, and the company's network service is expected to continue to grow this year.
The information security service has achieved a breakthrough in the non-telecommunications industry. The company's information security business started not long ago, and was first applied in the telecommunications industry. At present, it has achieved breakthroughs in Shanxi Guodian, Beijing Gehua Cable, Huaxin Hospital and so on.
Smart city and intelligent transportation business are growing steadily. The company has won many projects in smart cities in Beijing, Xinjiang, Shandong and other provinces and cities. It is expected that this year will continue to benefit from the 13th five-year Plan, steady business growth.
Profit forecast
Considering that revenue and net profit in 2016 exceeded our expectations, we raised our earnings per share forecast for 2017 by 5% from 0.23 yuan to 0.24 yuan.
Valuation and suggestion
At present, the company's share price is equivalent to 56 times Pram E in 2017. Due to the decline in market risk appetite, we maintained the recommended rating, but lowered the target price by 14.68% to 15.40 yuan, corresponding to 65 times Pamp E in 2017.
Risk.
The expansion of non-telecom customers is not as expected; the purchasing price of network excellent for operators has dropped sharply.
