Main points of investment:
Events. Northern latitude Communications announced on May 16, 2017 that the company and AIRSIA BERHAD (referred to as "AirAsia") signed a framework overall service agreement, the company will provide a variety of IT services for AirAsia.
For the specific projects involved in the cooperation, a separate service contract will be signed. At present, a single service contract has been signed, the specific cooperation content is: according to the usage habits of Chinese market users, the company completes the design and interactive interface development of AirAsia Chinese version mobile APP, so as to make it more in line with the usage habits of Chinese users.
Major breakthroughs have been made in aviation business, and the demonstration effect is significant. The company makes full use of its advantages in the field of communications to layout mobile Internet aviation business in advance. At present, it has carried out stable cooperation with Sichuan Airlines and Hainan Airlines. The partner, AirAsia, is the largest and earliest international low-cost airline in Asia to enter Chinese mainland. The signing of the cooperation agreement is an important breakthrough for the company in expanding overseas aviation enterprise customers, and sets up a demonstration effect for the company to become a potential high-quality partner for overseas aviation enterprise customers.
Equity incentive to complete the company of one mind, the distribution of rights and interests to cash in investment income. On January 5, 2017, the company completed restricted stock incentives, with the chairman and senior executives increasing their holdings of total equity by 2%. After the equity incentive, the company is of one heart and one mind, and the operating efficiency is improved. The company's current operating condition and development prospects are good, and the undistributed profits are huge. On May 5, 2017, the company announced that it intended to distribute a cash dividend of 1.1 yuan for every 10 shares to all shareholders with undistributed profits, and at the same time, transfer 12 shares to all shareholders for every 10 shares with capital reserve.
The distribution scheme of the company's rights and interests helps to enhance the liquidity of the stock, cash in the investment income, and at the same time show the company's confidence in long-term development.
Accelerate the transformation of mobile Internet, internal and external repair, business multi-point blossom can be expected. After the company transformed into an integrated mobile Internet operator, the fundamentals began to reverse, and revenue and profits reached an all-time high in 2016. The company implements the development strategy of "internal and external repair", maintains the advantages of mobile value-added services, mobile game services and virtual operator services, and achieves steady growth in performance; Internet lottery business waits for the landing of the policy; the occupancy rate of the industrial park is further improved, and the aviation business is expected to gradually expand the market, which is expected to contribute rich performance. At the same time, the company actively pays attention to the new trend of the development of mobile Internet, through the development of epitaxial layout of the Internet of things, artificial intelligence and other fields. At present, the company has invested in Tianyu Jingwei, a drone start-up, and set up an industrial fund, which will form a synergy with the Internet Industrial Park, and the new performance growth point is worth looking forward to.
Maintain a "buy" rating. Considering the overall improvement and growth of the company's business, we estimate that the company's EPS from 2017 to 2018 will be 0.28 yuan and 0.41 yuan respectively. At present, the company's main business focuses on the distribution of overseas boutique game agents, and the growth momentum of Q1 quarterly report in the past 17 years remains strong; virtual operators take the lead in making profits, especially the early layout of Internet lottery business, which greatly increases the upward flexibility of future performance. Therefore, it will be given 50 times PE in 2017, with a six-month target price of 14 yuan, maintaining the "buy" rating.
Risk hint: new business development is lower than expected, systematic valuation risk.