Main points of investment
Event: the company released its 2016 annual report, with revenue of 2.579 billion yuan, an increase of 14.32% over the same period last year, and net profit of 236 million yuan, an increase of 87.81% over the same period last year.
Based on the total share capital of 944993092 shares on December 31, 2016, the company plans to distribute a cash dividend of 1.00 yuan (including tax) to all shareholders for every 10 shares, with a total of 94499309.2 yuan in cash.
The cash acquisition of Yongding Zhiyuan simply rudely and quickly entered the big data market: the company acquired 21% of the shares of Yongding Zhiyuan in cash and increased its capital to Yongding Zhiyuan in monetary terms, holding a total of 43.5714% of Yongding Zhiyuan shares. Become the largest shareholder of Yongding Zhiyuan. The acquisition target has strong technical strength, has many years of experience in DPI equipment development and maintenance, and maintains good cooperative relations with major customers. It currently occupies about half of the market share of China Unicom and China Telecom Corporation, and is a strong competitive leader in the industry. Yongding Zhiyuan has pledged to achieve audited net profits of no less than 45 million yuan, 55.6 million yuan and 65.5 million yuan in 2016, 2017 and 2018, and has fulfilled its performance commitment in 2016. Under the circumstances that the demand of big data in the telecommunications industry has gradually become a rigid demand and the volume of data business continues to break out, the telecom data acquisition and analysis market will grow rapidly. the company's acquisition of Yongding Zhiyuan will bring the company a broad big data market opportunities and significant performance improvement.
With the rapid development of EPC business, Belt and Road Initiative layout has entered a payback period: inspired by the national Belt and Road Initiative strategy, the company began to layout overseas EPC business earlier, and won the bid for overseas project contracts of more than 10 billion yuan in 2016. After years of engineering experience, the company has made remarkable progress in project implementation and cost control, with a 7.56% year-on-year increase in gross profit margin and a 50% year-on-year increase in total business margin of nearly 70 million yuan. We expect that with the start of projects in Bangladesh, Laos and other countries this year, the company's EPC business will maintain steady growth.
Diversified industrial chain layout, climb high-tech and high value-added business: the company's optical fiber and cable business is limited by the lack of self-produced optical rods, and does not significantly enjoy the dividends of the optical communications industry, so the company carries out multi-industrial layout. more and more transfer to high-tech and high value-added fields. 1. Through mergers and acquisitions, the company has gradually formed a multi-way business line of "optical fiber and optical cable + overseas engineering + automotive electronics / communications + big data". The business line is continuously optimized; 2. The company participated in the co-establishment of M & A private equity funds to invest in investment opportunities, including automotive after-service market, big data and related projects in strategic emerging industries. 3. The company has made great efforts to promote the reserve of superconducting technology, gradually moving towards the commercial application scene, and the development potential is expected in the future.
Profit forecast and investment rating: the company has gradually formed a multi-channel business line of "optical fiber and optical cable + overseas engineering + automotive electronics / communications + big data". The strong reserve of superconducting technology has the potential for industrialization. It is estimated that the EPS of the company from 2017 to 2019 is 0.3,0.34 and 0.42 yuan, corresponding to PE on 32-28-22. We are optimistic about the future development prospects of the company in high-tech and high value-added multi-industry chain, and give it a "buy" rating.
Risk Tip: the delay in the start of overseas projects leads to the risk of revenue decline, and the development of new business is not as high as expected.