I. Overview of events
Recently, the company released the 2016 annual report and profit distribution plan: 1) realized operating income of 330 million yuan, an increase of 15.71% over the same period last year; net profit of shareholders belonging to listed companies was 38.15 million yuan, an increase of 9.91% over the same period last year, corresponding to an EPS of 0.69 yuan, an increase of 4.55% over the same period last year. 2) pay a cash dividend of 1.00 yuan (including tax) for every 10 shares, with an increase of 5 shares for every 10 shares.
At the same time, the company won the bid for the wireless ring network (ad hoc network) equipment procurement project, winning the bid amount of 10525905 yuan.
II. Analysis and judgment
The performance was in line with expectations, and sales of communications technical services and equipment and software promoted steady growth in performance. During the reporting period, business income reached 330 million yuan, an increase of 15.71% over the same period last year. The main reason is that network maintenance and network optimization, as post-cyclical industries, will continue to maintain a high growth rate, benefiting from the continuous increase in the stock scale of the communications network. In addition, the rapid promotion of triple play, the accelerated trend of outsourcing by telecom operators and the rapid development of 5G technology provide new growth power for the industry. In 2016, the company's communications technology service industry achieved operating revenue of 328 million, an increase of 15.15 percent over the same period last year, while sales of equipment and software reached 2.26 million yuan, an increase of 143.09 percent over the same period last year.
Under the two-wheel drive of communication technical services and equipment and software sales, the company's performance is expected to grow steadily. At the same time, based on the existing communication network technical services, the company will extend its business to ICT, Internet of things and other related fields through endogenous growth and epitaxial mergers and acquisitions, and gradually become an outstanding domestic information service provider.
Winning the bid for wireless ring network equipment procurement project, promoting the application of wireless ad hoc network in the telecommunications industry, the company won the bid wireless ring network (ad hoc network) equipment procurement project, the winning bid amount is 10.53 million yuan, and the procurement cycle is two years. The wireless ring network equipment of the winning project is based on wireless mesh ad hoc network technology and is independently developed by the company. it provides IP data, gigabit optical interface and E1 circuit interface, which can seamlessly connect the transmission equipment of telecom operators and base station communication equipment. The wireless ring network equipment procurement project is the first example in the country to apply wireless ad hoc network technology to communication operator 2G/3G/4G base station transmission interruption emergency repair, disaster relief emergency command communications and other scenarios. It is estimated that the market scale of wireless ad hoc network in Fujian Province will reach more than 100 million yuan in the next few years. The winning of this project is a positive result of the company's increasing investment in R & D, an important step for the company to expand the field of ICT, and marks the company's important progress in the conversion of military products into civilian use, which has a positive impact on the company's future business performance and financial situation.
Accelerate the expansion of markets at home and abroad, increase R & D investment to achieve technological innovation companies to continue to maintain market leadership in Fujian, at the same time in Guizhou, Guangxi, Jiangxi, Chongqing and other provinces continue to expand, and achieve a certain market share. In the overseas market, the company closely follows the development route of "Belt and Road Initiative" of equipment suppliers such as ZTE Corporation, increases the investment of resources in Southeast Asia, and sets up a new Sri Lankan subsidiary. In 2016, the company achieved overseas revenue of 21.568 million yuan, an increase of 528.63% over the same period last year. At the same time, the company continues to track the trend of technological development in the industry, increase investment in research and development, introduce high-quality communications talents, provide technical support for the company's business development, and achieve continuous technological innovation. In 2016, the company added software copyrights such as centralized monitoring and management platform for 3G/4G mobile communication optical network features, customer presentation system based on key customer data, LTE-FDD wireless test data management platform application software v4.0, power intensive network management system software v2.0, etc.
Third, profit forecast and investment suggestions
It is estimated that the EPS from 2017 to 2019 is 0.65,0.83,1.04 yuan respectively, and the corresponding PE is 96.95,76.87 and 61.07 times, respectively. As the company is a secondary new stock, the valuation level is relatively high, and the company expands from the region to the whole country and overseas. in view of the expectation of epitaxial mergers and acquisitions, the company is given a certain valuation premium, giving the company 120-125x PE in 2017, and the reasonable price range for the next 12 months is 78.0-81.3yuan. Maintain the "highly recommended" rating.
Fourth, risk tips:
The competition for communication network management services is fierce; the expansion of markets at home and abroad is blocked; and the progress of fund-raising investment is not as expected.