I. Overview of events
The company released its annual report for 2016, which revealed that its operating income in 2016 was 515 million yuan, down 9.08% from the same period last year. The net profit returned to the mother was 85.0701 million yuan, an increase of 13.54% over the same period last year, and earnings per share was 0.23 yuan.
The company intends to distribute a cash dividend of 0.10 yuan (including tax) to all shareholders on the basis of 377 million shares, not to give bonus shares and not to increase share capital with provident fund.
II. Analysis and judgment
Benefiting from the development of railway construction, the traditional business performance is stable
In recent years, the company deeply ploughs the domestic railway communication signal market, and the market share of superior products ranks firmly in the top three. In addition, the company also actively developed urban rail transit business and successfully won the bid for Zhengzhou Metro Line 1, Line 2 and other urban rail projects.
Following the national "high-speed rail going global" strategy, the company won bids for projects such as Nigerian and Ethiopian railways. During the 13th five-year Plan period, the investment in railway fixed assets will reach 3.5 to 3.8 trillion yuan, while China's signal, safety and other IT equipment accounts for only about 4 percent of railway investment, which is far lower than that of developed countries. We believe that the gradual increase in the proportion of railway information investment will contribute to the steady development of the company's railway business.
Layout of "Big Traffic WiFi" New Blue Ocean
By participating in Feitian Union, Saifu Technology, colorful access and other companies, the company has laid out the layout of aviation WiFi, train WiFi, railway station WiFi, bus WiFi and so on. According to the TalkingData report, mobile WiFi traffic accounted for 57.2% of mobile traffic in 2014, up 19% from the same period last year, and nearly 60% of mobile smart device users used WiFi to access the Internet.
With the emergence of mobile Internet, traffic WiFi will reflect huge commercial value. Hardware sales, advertising revenue, O2O services and so on can form a fixed business model in the future. We believe that the traffic WiFi is still in the market development period, although the profit is not formed, but with the increase in the number of travelers and the rapid popularity of the mobile Internet, the company's related business will have broad prospects for development.
Shareholders are determined to increase employee shareholding, and their future development is full of confidence.
The company launched the first phase of the employee stock ownership plan, buying a total of 16.99 million shares, with a transaction value of 249 million yuan, accounting for 4.51% of the company's total share capital. In addition, it will be increased to major shareholders, with a non-public offering of no more than 18.17 million shares and a total fund-raising of no more than 270 million yuan. The behavior of the company's senior executives to increase their holdings of shares shows their confidence and determination in the rapid development of the company.
Revenue declined significantly for the whole year, with a slight rebound in the first quarter.
The company's operating income decreased compared with the same period last year, mainly due to a 34.32% drop in operating income from the previous year's wholly owned subsidiary, National Railway Yang, compared with the same period last year. Thanks to the development of subway projects, the company's sales revenue in the urban rail transit industry has increased by 2035.18% over last year. The company's quarterly report shows that revenue in the first quarter of 2017 was 68.8779 million yuan, an increase of 18.21% over the same period last year, and revenue picked up slightly. We believe that the overall performance in 2017 can be expected after the formation of the new business profit model.
Third, profit forecast and investment suggestions
It is estimated that the EPS of the company in 17-19 is 0.39,0.49 and 0.59 yuan respectively. Based on the vast space of the company's railway communications market business and the layout of "big traffic WiFi", a range of 45-55 times PE in 2017 is calculated, corresponding to the valuation range of 17.6-21.50 yuan in the next 12 months, the rating of "cautious recommendation" is given for the first time.
IV. Risk hints
1) the risk of industry policy change; 2) the risk of industry competition; 3) the new business is not up to expectations.