The company released the 2016 annual report, currently in the business capacity period, the turning point is approaching, the steady development of traditional business, urban rail, gold consumption and other new business space is huge, ready to start. Continue to strongly recommend.
Event: the company released its annual report in 2016, with an operating income of 470 million yuan, an increase of 19.85% over the same period last year, and a net profit of 90.78 million yuan belonging to shareholders of listed companies,-20.21% over the same period last year.
Saving energy from winter to spring: the company achieved good revenue growth in 2016, but net profit declined to a certain extent, which we believe is the performance of the company's current business capacity-building period and increased investment. The company strengthened its R & D investment in 2016, and its R & D expenditure increased to 37.16 million yuan, an increase of 103% over the same period last year, and all three expenses increased. The market is worried about the decline in the company's business in the traditional railway sector. However, we believe that the company has come to a turning point, and the traditional railway business is expected to develop steadily under the general trend of railway construction during the 13th five-year Plan, while the development of new businesses such as integrated railway operation and maintenance, urban rail transit and passenger transport automation will become a new fuel for the company's performance. For example, the operation and maintenance business has contributed 23.96% of the income in 2016, and the gross profit margin is high, which is 74.87%, which has a good prospect. In addition, Beihai Communications, which the company previously announced and acquired, will help the company to cut its business into the "urban rail transit" end, and the safety monitoring products and customer service operation and maintenance services currently used in railways can enter the field of urban rail transit on a large scale, which will also open up a new market space for the company, which is expected to form a "railway + urban rail" launch pattern.
Consumer finance has been sown: in September 2015, the company contributed 200 million yuan with Everbright Bank to participate in the establishment of Everbright Consumer Finance Company and began to get involved in consumer finance business, which has a good synergistic effect with the company's railway and urban rail service business. Expandable businesses such as: 1) passenger ticket payment scene; 2) big data service based on rail transit; 3) advertising under rail service scenario. With the help of the huge passenger flow basis of railway passengers and urban rail transit, consumer financial business is expected to fully develop the company's traditional business resources and achieve pluralistic coordination. The consumer finance industry is in an explosive period in China, and the upgrading of consumption in the next two years will promote the wave of national leverage. If the company can get a share in this trend, it will contribute more than expected earnings to the performance.
Maintain the "highly recommended-A" rating: in view of the steady development of the company's traditional business and the explosion in new markets such as urban rail and consumer gold, we expect net profit of 183.0 million yuan from 2017 to 2018.
Maintain the "highly recommended-A" rating.
Risk hints: (1) the policy support for rail transit construction is not as strong as expected. (2) the business of consumer financial companies is blocked.
