Summary of the report:
Income maintained steady growth and gross profit margin fell slightly. In 2016, the company achieved revenue of 1.31 billion yuan, an increase of 2.24% over the same period last year; net profit belonging to listed companies was 74.983 million yuan, down 30.89% from the same period last year; EPS was 0.17 yuan, down 32% from the same period last year; and the overall gross profit margin was 25.79%, down 2.85% from the same period last year. The main reason for the decline in the company's performance and gross profit margin is the intensification of competition in the mobile communication technology service market and the decline in contract prices.
Net excellent business to maintain a leading position, actively expand overseas markets. The company is in the leading position in the domestic network excellent market, especially in China Mobile Limited market. Benefiting from the large-scale commercial use of 4G, the network capacity continues to increase, and the company has achieved 754 million yuan in revenue from network optimization in the past 16 years, an increase of 12.03% over the same period last year. In terms of operator network excellent business, the company's services are widely recognized by China Mobile Limited provinces and cities; in terms of equipment manufacturer engineering optimization, the company continues to implement 9 provincial framework cooperation with Huawei, among which Anhui, Shaanxi and Zhejiang business volume has been greatly improved. with ZTE to continue to implement the nine provincial optimization service framework, and actively expand cooperation with Ericsson, Noxi and overseas business, overseas business revenue of 8.57 million yuan in 16 years.
Affected by the wireless network construction cycle, the network construction business has declined. The company's network construction business is closely related to the wireless network construction cycle of operators. As the peak of 4G construction has gradually passed, the wireless capital expenditure of operators has gradually tightened, and the sales price of products under the collection mode has dropped further. The company's revenue from network construction business in the past 16 years has reached 416 million yuan, down 13.28% from the same period last year, and the gross profit margin is 22.84%. Down 4.18 percentage points.
It is proposed to acquire a 100% stake in Internet Harbor and enter the field of Internet basic services. In July 2016, the company bought a 51% stake in Internet Harbor for 398 million yuan to enter the field of Internet basic services. Connected Harbor is mainly engaged in IDC and hybrid cloud services, with a net profit of 42.3294 million yuan in 16 years. At present, the company plans to suspend trading to acquire its remaining shares, with a transaction amount of about 550-700 million yuan.
Profit forecast and investment suggestion: excluding the consolidated table of connected Harbour for the time being, the company is expected to have revenue of 1.407 billion yuan, 1.579 billion yuan and 1.909 billion yuan respectively, net profit of 91 million yuan, 108 million yuan and 133 million yuan respectively, EPS of 0.21,0.25 yuan and 0.31 yuan respectively, dynamic PE of 49 times, 42 times and 34 times respectively, maintaining the "overweight" rating.
Risk hint: the risk of intensified competition in the market of network optimization and network construction.
