Quick look: the leader of local network maintenance and optimization, the whole country,

When the market layout in Southeast Asia is in progress.

The company was founded in 2001, changed into Co., Ltd in 2011 and landed on the gem in 2016. The company's main business includes two parts: communication network maintenance service and communication network optimization service. In 2015, the revenue was 286 million yuan and the net profit was 35 million yuan. The net profit in 2016 is expected to be 0.35 billion yuan and 42 million yuan. The company has more than 1000 employees. Customers mainly include telecom operators such as China Mobile Limited, China Unicom, China Telecom Corporation, radio and television operators, and communication equipment providers such as ZTE, Huawei and Shanghai Bell.

The company is one of the most powerful communication network management service providers in Fujian Province. it can provide full network-level technical services including access network, transmission network and core network in all 9 prefectures and cities in Fujian Province. Relying on technological advantages, the company has carried out business in more than ten provinces and cities, such as Shandong, Guangdong, Anhui, Jiangxi, Jilin, Heilongjiang and Jiangsu, and has set up companies in Thailand, Malaysia, Myanmar and other overseas countries.

The controlling shareholder and actual control of the company is Mr. Chen Rongjie. As of November 1, 2016, Mr. Chen Rongjie's shareholding ratio is about 52.87%.

The volume of the excellent market of the network goes up and the price goes down, and the third party leader is positive.

Growing up.

China's communication network is huge and complex, and network maintenance and network optimization are indispensable.

The construction of communication network in our country is huge in scale and complex in structure. Reliability, stability and discontinuity have become the key indicators of network quality, and network maintenance and network optimization have become long-term and necessary links after the completion of network construction.

Wide distribution of customers and low concentration of third-party market

Telecom network maintenance and network optimization market customers include telecom operators, radio and television operators, tower companies, communication equipment providers, municipal departments and troops, etc., customers are widely distributed, generally according to the geographical formation of supply and demand.

There are three kinds of telecom network maintenance and network optimization market companies: (1) telecom operators, (2) communication equipment suppliers, and (3) third-party communication network management service enterprises.

In the competition, the third-party enterprises have the characteristics of fast response, low price and flexible service, which has become an important link in the market.

The market scale increases gradually, the market structure shifts to the third party, and the gross profit margin level enters the low point market scale. On the wireless side, with the gradual deepening of 4G network construction and the gradual opening of 5G network construction, the scale of wireless telecommunications network continues to upgrade; with China Mobile Limited joining the fixed network construction, the trend of tri-network convergence of radio and television has landed, all of which have led to the improvement of telecom network maintenance and network optimization market scale. Market structure. As the operator business center shifts to the client, the intensity of telecom operators' participation in network maintenance and optimization will be further reduced, and third-party enterprises are expected to undertake more business. To sum up, the third-party network optimizes the market scale because the change of network scale and market structure is still in the period of scale expansion, and with the intensification of market competition, the profit margin is likely to show a downward or stabilizing trend.

Based on Fujian radiating the whole country, pay attention to the construction of R & D and service platform

Based on the development of Fujian, when the business expansion is going on

The company's main business is network maintenance, accounting for more than 90% of revenue for many years, network optimization as a supplementary business, more for communication equipment manufacturers.

The company's business covers access network, transmission network and core network, supporting almost all mainstream standards of domestic networks. Revenue from the main business has been growing for many years, and profits are expected to grow by 0% to 20% in 2016. The company exists regionally as a third-party communication network management service enterprise customer. The company earlier provided communication network services for telecom operators in Fujian Province, and has more than 10 years of cooperation with the provincial branches of the three major telecom operators, with a local leading advantage. At the same time, the company is mainly in Fujian and its surrounding East China, and is currently making great efforts to expand its business outside the province and expand rapidly outside the province. At the same time, the company distributes the Southeast Asian market and has opened holding companies in Thailand, Malaysia, Myanmar, the Philippines and other countries.

In addition, the company has expanded the users of radio and television operators and troops as well as municipal departments in recent years. After becoming a radio and television service provider in Anhui and Fujian, on December 21, 2016, the company won the bid for Guangdong Radio and Television 2016-2017 cable network project construction unit qualification procurement project. The total scale of the project totaled 38.88 million yuan in two years, with 6 bid-winning enterprises. The company recently announced the signing of a project procurement contract with Emerson Network Energy Co., Ltd., further expanding the range of customers. The company's expansion in radio, television and other users will become a major focus of the company in the future.

Attach great importance to research and development, industry-university-research one-stop production

The company attaches great importance to research and development, research and development costs continue to increase, the growth rate is in line with revenue growth. After years of technology accumulation, the company has formed a series of core technologies. The company's core technology is mainly used in communication network maintenance and network optimization, while there is also some accumulation in the field of monitoring and maintenance of power environment equipment in computer rooms. we have independently developed a number of communication network management service systems, such as transmission system information application platform, community building communication resources intelligent management system, online data independent detection platform, etc., and have independently developed and applied for 34 software copyright. At the same time, the company cooperates with Fujian Post and Telecommunications School. Mr. Chen Rongjie, Chairman of the Company, is now Honorary President of Fujian Post and Telecommunications School. The company has also achieved long-term cooperation with Huawei, ZTE and other companies, providing a strong support for the company's research and development.

Raise funds for the construction of communication network technical service platform and R & D center

The company issued 17.53 million new shares at the price of 10.26 yuan per share, raising about 147 million yuan for the construction of communication network technical service platform and R & D center, and replenishing working capital. The communication network technical service platform will expand the company's service network and enhance the company's service capacity through the regional service centers of many provinces and cities across the country. The R & D center construction project will further enhance the company's R & D capability and provide impetus for the company's further development in the future.

Industry acquisition to choose the opportunity to carry out, similar company planning may be used as a reference company has said to choose the opportunity to carry out mergers and acquisitions in related industries. There are many listed companies in domestic companies similar to China Fortis, and there are not a few newly listed companies. Through the comparison of the development ideas of these listed companies, we can further understand the development of the company and the industry.

Investment advice and rating

1. Market side: with the deepening of wired and wireless network construction in China, the volume of network optimization and network maintenance business will continue to rise. At the same time, the share of third-party service providers will show an increasing trend.

2. Company side: endogenous development. With the deepening of the company's market expansion and the construction of the communication network technical service platform, the company's national market share is expected to further increase. At the same time, if the business structure can improve the higher profit margin of rectification and maintenance and network optimization business, the company's profitability will be greatly improved. In addition, the expansion of radio, television, military and other new customers will become an important part of profit improvement.

3. Company side: extension development. The company has the development plan to choose the opportunity to carry out mergers and acquisitions in related industries, and the future cooperative extension mergers and acquisitions will become the long-term focus of the company's further development.

We expect the company's profit from 2016 to 2018 to be 37 million, 47 million, 63 million, corresponding to PE 110X, 87x, 65X, "overweight" rating.