Main points of investment:
Event: the company released its annual report on April 20, showing that its annual operating income was 192 million yuan, down 4.28% from the same period last year.
The net profit belonging to the parent company was 19 million yuan, down 54.11% from the same period last year. The company's performance is in line with expectations.
Revenue has declined slightly, and competition for traditional products has intensified day by day. In 2016, the industry penetration of the traditional electronic payment password market has gradually increased, the market competition has further intensified, some manufacturers with weak competitive strength in the industry have gradually withdrawn from the market, and the company has adopted active marketing strategies. the market share of the industry is gradually increasing. Due to the decline in overall market demand for traditional products, the company's sales volume and revenue of electronic payment password products declined slightly in 2016.
Increase the research and development and promotion of new technologies and new products, during which the rapid increase in costs leads to a decline in net profit. As 2016 is a critical period for the company's business transformation and market expansion. The company's independent research and innovation of paper pattern anti-counterfeiting technology fills the technical gaps in domestic and international related fields, reaches the level of domestic and international advanced technology, forms the company's unique technological competitive advantage, and further consolidates and strengthens the company's leading position in the industry; this revolutionary technology in the field of material feature identification will greatly change the depth and extension of the anti-counterfeiting field, and is expected to change the pattern of the anti-counterfeiting industry. The company's investment in new product research and development and marketing increased significantly compared with the same period last year, so the increase in expenses during the period led to a certain decline in the company's net profit.
The company is in an important transition period, looking forward to the contribution of new products in the future to achieve performance reversal, medium-and long-term optimistic. The company's R & D and marketing investment and follow-up expenditure last year are expected to bring about sustained growth in new product revenue today and next year. And its global original paper pattern recognition products are expected to have 50-10 billion market space; the bank-enterprise communication platform built by the company in the early stage has changed from "selling products" to "building platform + providing services", improving customer stickiness and accumulating data assets. and the company has been deeply ploughing financial information security over the years, and has gradually established a long-term and stable cooperative relationship with major commercial banks across the country. The company will, as always, increase the research and development and promotion of new technologies and new products, and strive to contribute to performance growth and enhance the company's profitability through new products as soon as possible.
Downgrade earnings forecast and maintain "buy" rating. We downgrade the company's profit forecast (the company is in a period of transition, the competition for traditional products is intensified, and the cost during the period of development and promotion of new products is relatively high). The estimated return profit for 2017-2019 is 19 million, 21 million, 23 million (the original forecast for 2017, 2018 net profit is 231 million, 299 million). EPS is 0.06,0.06,0.07 yuan per share respectively, and the current stock price corresponds to a price-to-earnings ratio of 217217186 times.