Events:
The company released its 2016 annual report, with operating income of 515 million yuan, down 9.08% from the same period last year, and net profit belonging to the parent company was 86.07 million yuan, up 13.54% from the same period last year. The company also announced its quarterly report that its revenue was 68.88 million yuan, 18.21% of the same period last year, and its net profit was 8.11 million yuan, an increase of 11.40% over the same period last year.
Comments:
The performance of China Railway has declined, affecting the performance of the company. The operating income of China Railway Yang, a wholly owned subsidiary, accounts for about 20% of the company's total revenue, but in 2016, due to the change in the market model of coded equipment and ladle copper wiring, China Railway Yang's operating income dropped significantly by 34.32%. At the same time, the three fees increased significantly, and the 2016 net profit of China Railway Yang decreased by 79.96% compared with the same period last year. Due to the impairment of the positive assets of the national railway, the company set aside 21.67 million of the impairment of goodwill.
The increase in the company's net profit over the same period last year was mainly due to the receipt of VAT over-tax rebates, resulting in a 31.36 million increase in non-operating income over the same period last year; the company's gross profit margin (48.4%) and three rates (26.1%) were basically the same as last year.
Since 2014, the next city company has anchored the field of "big traffic WiFi" and successively participated in companies such as Feitian Union (23.35%), Saifu Technology (33%), colorful Tongda (9.03%) and Smart Map (2.86%), which basically covered all the traffic scenes and laid a good foundation for the company's traffic WiFi strategy.
On April 10, the company announced an additional approval document, and on April 11, the company announced to increase the company's business scope and amend the articles of association, adding "design, production, agency, advertising, and undertake exhibition activities." . On the one hand, it shows that the company is steadily promoting the strategy of "big traffic WiFi", on the other hand, it not only binds the core interest groups but also reflects the company's determination to develop transportation WiFi.
Target price 20 yuan, maintain the "buy" rating
Optimistic about the company's long-term development prospects, the main industry will benefit from the construction of railway and rail transit, while the layout of huge potential traffic WiFi, stable performance growth and room for imagination. Taking into account the impact of additional offerings, we expect the company's fully diluted EPS from 2017 to 2019 to be 0.27,0.34,0.42 yuan respectively, with a target price of 20.00 yuan, maintaining a "buy" rating.
Risk tips: the risk of product gross profit margin decline, the slow progress of traffic WiFi projects, and the lower-than-expected risk of subway business.