The first quarter of 2017 was in line with expectations

Gaohong Co., Ltd. announced first-quarter results: operating income of 1,762 billion yuan, an increase of 19.90% over the previous year; net profit loss attributable to the parent company was 4,3196 million yuan, an increase of 71.17% over the previous year, corresponding to a profit loss of 0.01 yuan per share. It is in line with the performance guidelines previously issued by the company. The first quarter is the company's traditional low season, and previous years were basically all losses.

Development trends

The main business is stable, and the business is quite traditional. Revenue grew smoothly in the first quarter. The company's enterprise informatization, information services, and IT chain sales businesses are more traditional. At present, growth is relatively stable. This trend is expected to continue throughout the year.

Trusted computing and connected car services still have to wait. The company invested in the establishment of research institutes to lay out fields such as trusted computing, vehicle networking, and information security. The company collaborated with Datang Telecom to set up an Internet of Vehicles laboratory and invested in the development of LTE-V technology. However, the LTE-V market and trusted computing are still not mature, and market acceptance is still low. It will still take time for new businesses to contribute revenue.

Profit forecasting

Net profit attributable to the mother in 2017/2018 was reduced by 29.9/ 28.3% to 91 million and 103 million yuan.

Valuation and advice

Currently, the company's stock price corresponds to 70 times P/E in 2017. The company's traditional business is the main business, and the valuation is high. The target price was lowered by 27% to 10 yuan, corresponding to 68 times P/E in 2017. Remain “neutral.”

risks

Business progress fell short of expectations.