Event: Announcement of quarterly results and semi-annual earnings forecasts. 2017Q1 had revenue of 203 million yuan, an increase of 16.7%, and net profit of 5.87 million, a year-on-year increase of 190.3%. The announcement predicts that the 2017 H1 profit growth rate will be 172.2%-221.9%, and net profit will be 4300-50.85 million yuan. In particular, profit growth accelerated on a high Q2 base, in the range of 66%-102%. Investment points: Performance exceeded expectations. The median profit growth rate for 2017 H1 was 197%, and the Q2 quarter had the same high growth rate, with a median of 84%! The median increase in the 2017 Q1 performance forecast is 177%. Unlike the market's concerns about Q1 growth from a low base, the profit for the 2016 Q2 quarter was 22 million yuan, and the historic Q2 growth clearly followed the full-year profit trend! The growth rate of remuneration (including capitalization) was only 17.2%, and the profit growth rate in 2017 began to be significantly faster than the growth rate of income! The sales expenses in Q1 grew by 12.9%, 99.4% and 101.6% in 2015/2016, 14.8% in management expenses, and 13.5% and 62.8% in 2015/2016. After product line sales accelerated significantly, enjoying the mismatch between cost and revenue was the main reason. The March in-depth report explains the long life cycle of its software becoming an A-share government big data software provider, and there has been a return of flexible product lines! This round of acceleration began in 2017. Assuming the 2017 H1 growth rate of 193%, the full-year profit is expected to exceed expectations by more than 25%. 1) Shanghai has not yet been merged since it was transferred to the account. The revenue structure of 2017 H1 and 2016 H1 is consistent, and the profit corresponding to the H1 growth rate of 193% is 47 million yuan. 2) Considering the high share of government companies in the second half of the year, the profit base for 2016 h2 was high. Even if the 17H2 profit growth rate is only 80%, the corresponding net profit is 365 million yuan. 3) Shanghai Yitong's cash purchases were transferred in January, and the 2017 exam preparation profit was 58 million yuan. 4) In the context of big government data, the total profit for preparing for the exam for the whole year is expected to exceed 474 million, and the profit forecast is 25% higher than 374 million! The growth logic is that government big data is the leading stock with a market space of 100 billion dollars! The in-depth report on March 13 broke into Jiuqi's software business line, focusing on the emergence of flexible business in government big data. According to argument 1, the market was once concerned about long-time endogenous business. The 2016 annual report announced that the e-government revenue growth rate for Jiuqi's original two major business areas was 100.88% (including Huaxia Dentsu, excluding 42%), and the growth rate of group management revenue was 34.08%. It can be estimated that endogenous stickiness will continue to grow for 3 years. Argument 2: Net profit per capita increased 4 times, ROE increased 3 times, and internal and external collaboration clearly exceeded expectations. Argument 3: Construct a “Jiuqi+” big data strategy and lay out industries such as finance, education, civil affairs, transportation, administration of justice, and health. Big data on government affairs has driven a sharp increase in profits, and the core value is breaking through previous small market spaces such as finance and group control! After the Q2 profit greatly exceeded expectations, due to prudence, the full-year profit forecast was maintained for the time being, and the “buy” rating continued. Net profit for 2017, 2018, and 2019 is expected to be 374 million, 462 million, and 575 million. The corresponding PE in 2017 was 26X, and the PE valuation was at the bottom of history. Revenue and profit growth is expected to be 77% and 71% in 2017. Since cash mergers and acquisitions were transferred at the beginning of the year, 2017 profits include the full year consolidated statement of Shanghai Mobile. Using the industry average of 35 times dynamic PE, there is room for a rational increase of more than 30%.