Events:
On March 21st, the company issued a preliminary plan for the board of directors: to acquire 100% stake in Beihai Telecom at a price of 568 million, with a cash payment of about 160 million, and a share issue payment of about 408 million (9.12 yuan per share, 44.81 million shares), locked up for 12 months. The target promises to achieve a net profit of 40 million, 50 million and 61 million respectively from 2017 to 2019.
Main points of investment:
The merger and acquisition of Beihai Communications has led to the expansion of the company's track information business. Beihai Communication deeply ploughs the field of urban rail transit informatization, and its main products are passenger information system and public broadcasting system. During the 13th five-year Plan period, the investment scale of urban rail transit will reach 1.7-2 trillion yuan, an increase of 38% over the 12th five-year Plan period. Compared with railways, the market of urban rail transit will grow faster in the future. The company plans to acquire Beihai Communications to cut into the field of urban rail transit information, forming a business pattern in which railway and urban rail transit go hand in hand.
The proportion of railway information construction in the total railway investment is gradually increasing. According to the plan of the State Railway Administration, the investment in railway fixed assets will reach 350 to 3.8 trillion yuan during the 13th five-year Plan period, which is a steady increase compared with the 12th five-year Plan period. The huge stock and incremental market of the railway system provides a broad space for information construction and transformation. The data show that since 2012, the proportion of China's railway information construction in the total railway investment has gradually increased. We count a sample of 9 railway information enterprises in A shares (9 stocks are selected according to the wind high-speed rail index, brilliant Technology, Dashi Intelligence, Sai Wei Intelligence, Century Ruier, Huahong Jitong, Oriental Network Power, Yunda Technology, Huaming Intelligence, thinking Control). From 2012 to 2015, the operating income accounted for 0.78% of the total railway investment, and we expect this trend to continue in the future.
C-end business can be expanded in the future. Through endogenesis and denotation (acquisition of Yi Wei Xun, Boyuan Rongtian, Beihai Communication), the company actively cards the railway information construction of terminal B, binds good customer resources and grasps passenger travel information, and is expected to open up the post-service market of C-terminal railway in the future. there is a lot of room for expansion.
Participate in 20% of Everbright consumer finance and share the dividend of the rapid development of the consumer finance industry. Consumer credit will reach 41 trillion in 2019 and will maintain a rapid growth of more than 20 per cent in the next few years. According to the statistics of the CBRC, 16 consumer finance companies that have approved to start business have made a cumulative net profit of 800 million yuan in the first three quarters of 2016. According to the characteristics of the consumer finance industry, the maturity will accelerate as the scale expands after the profit period. Everbright Consumer Finance, which is waiting to start business, will share the dividend of the rapid development of the consumer finance industry in the future.
Profit forecast and investment rating: based on the prudent principle, regardless of the impact of mergers and acquisitions on the company's performance and equity, the net profit for 2016-2018 is expected to be 96 million, 182 million, 232 million, and EPS is 0.18,0.34,0.43 yuan. As the railway construction cycle led to 2016 becoming a "bidding year" for information-based procurement, the company's performance dropped slightly compared with 2015. According to the railway construction cycle, it is inferred that in the next few years, the probability of information procurement will return to the "bidding year", and the performance will return to the rising channel. Maintain the buy rating.
Risk hint: the confirmation of orders in the railway industry is not as expected, the promotion of mergers and acquisitions is not as expected, the future performance of the company's proposed acquisition is uncertain, and the progress of consumer finance is not as expected.
