Events:
Xinyada publishes its annual report. In 2016, the company achieved an operating income of 1.38 billion yuan, an increase of 28.7 percent over the same period last year, and an operating profit of 133 million yuan, an increase of 10.3 percent over the same period last year. The net profit belonging to shareholders of listed companies was 123 million yuan, an increase of 1.3 percent over the same period last year. Net profit after deducting non-recurring profits and losses was 112 million yuan, an increase of 25.6 percent. The company's revenue is 11% higher than our previous forecast (1.19 billion yuan), the net profit is 15% lower than our forecast (140 million yuan), and the performance is slightly lower than we expected.
Main points of investment:
After deducting non-profit, the net profit increased by 26% compared with the same period last year, and the main business grew steadily. The company's net profit in 2016 was mainly affected by the following points: hardware revenue was 150 million yuan, down 31% from the same period last year, which is expected to come from falling prices and increased competition in the industry as a whole; investment income was 18 million yuan, down from 33 million yuan last year; government subsidies were 22.37 million yuan in 2016, down from 25.82 million yuan last year; and the company's non-operating income was 24 million yuan, down from 3000 million yuan last year. However, the company's net profit after deducting non-recurring profit and loss was 112 million yuan, an increase of 25.6% over the same period last year.
Software products achieve breakthroughs. Revenue from software services increased by 35% in 630 million compared with the same period last year, and sales of self-developed software reached 210 million yuan, an increase of 124% over the same period last year. The rapid growth in revenue is expected to come from the smooth promotion of financial software products and technologies such as corporate process banking and risk management.
In 2016, the integration went smoothly and entered a larger area of growth. In 2016, the company participated in Container Cloud and Harmony Cloud Technology, relying on the SEL Lab of Zhejiang University to improve the company's one-stop container cloud operation and maintenance platform that uses container cloud products and technologies to provide fully managed services for financial customers; join hands with interest chain technology to explore new Internet business operation models, cut into those low-frequency and high-value transactions or businesses with manual operational risks, and explore block chain technology-based application products such as node computers. To reach Pan-Thai Technology as the main body for individuals and industrial chain institutional users (TO C), to create a complete form of consumer financial technology platform. It is expected that the company will continue to increase its Fintech and actively promote the research and development of advanced technologies such as big data, artificial intelligence, cloud computing and blockchain and their application in the field of financial business.
Downgrade earnings forecast and maintain buy rating. Considering that the company is dragged down by the hardware business and the industry competition intensifies, we reduce the company's 2017-2018 net profit by 26.2% and 26.6%, and expect the company's net profit for 2017-2018 to be 1.52,1.85 and 235 million yuan. The projected revenue for 2017-2019 is 16.9,19.9 and 2.39 billion yuan, respectively, and the earnings per share are 0.35,0.42 and 0.53 yuan respectively. It is expected that the company will continue to integrate emerging businesses and enter more growth areas through 2016-2017. In addition, assuming that insurance management and consumer financial technology companies in 2017 have a performance inflection point under the continued investment of Xinyada, the company's earnings are expected to improve, and we maintain our buy rating.