Company development takes advantage of the “digital Fujian” policy
Xi Jinping, then governor of Fujian Province in 2000, discussed “digital Fujian” at a special provincial government conference hosted by the provincial government
An accurate definition has been made, and Fujian has achieved outstanding results in information technology construction over the past 16 years. In the latest “Digital Fujian” Plan Outline for the 13th Five-Year Plan, Fujian Province clearly proposed various tasks such as speeding up the construction of a government data cloud, deepening the sharing and opening of government data, implementing new government applications, and improving the public platform system. By 2020, an efficient and convenient online government will be built. The core business informatization rate will reach 100%, and the core data sharing rate will reach 80%. In the future, the company will combine the investment opportunities of the 13th Five-Year Plan's “Digital Fujian” plan with its own development strategy to continue to cultivate the e-government market segment and vigorously develop businesses such as vertical service platforms for electronic inspection and quarantine, IoT public service platforms, and public platforms for informatization cloud services for small and medium-sized enterprises.
Going deep into the vertical field of electronic inspection and quarantine to build an integrated service platform for the QAC is expected to be officially put into operation on January 1, 2017. On the one hand, in the next 2-3 years, local quality inspection and quarantine systems will need to complete the transformation and connection with the main system of the General Administration. As the sole contractor of the e-CIQ backbone system, the company will have absolute technical advantages and resource advantages; on the other hand, the company will penetrate from the G end to the B end to the C end to seize users to build an integrated service platform in the vertical field of electronic inspection and quarantine. At that time, 40,000 workers across the country will use the electronic inspection and quarantine platform, covering 1.1 million registered enterprises, and the number of enterprises handling business will reach 300,000 to 400,000. Up to now, the company has successively set up Fujian Rong EasyPay and Zhejiang Jianrong, laying out vertical service platforms for electronic inspection and quarantine.
Set up Xing Rongji to build an IoT and SME information cloud service platform. In October 2015, the company and Nebula Big Data, a wholly-owned subsidiary of Fujian Electronic Information Group, which has a background in the Fujian State-owned Assets Administration Commission, and Lin Weiguo, a natural person, funded the establishment of Xing Rongji. The company holds 71% of the shares. Xing Rongji owns the sole franchise for the Internet of Things public service platform in Fujian Province. It undertakes the operation of the IoT public service platform business, formulates IoT business development plans, and expands the IoT business market. In addition, Xing Rongji has also set up the only public information cloud service platform for small and medium-sized enterprises in Fujian Province authorized and operated exclusively by the government to provide SMEs with five major service sectors, including ICT services, software services, government services, financial services, and vocational education. In the future, it will further expand more services such as e-commerce, enterprise asset management, enterprise energy management, and the Internet of Things.
Profit forecasting and investment advice
The company's 2016-2018 EPS is expected to be 0.04, 0.08, and 0.13 yuan respectively, corresponding to the current stock price PE of 354X, 166X, and 107X respectively. The company is expected to build three integrated service platforms: a vertical service platform for electronic inspection and quarantine, an IoT public service platform, and an informatization cloud service platform for small and medium-sized enterprises, which will give a certain valuation premium to the platforms. Furthermore, the company plans employee stock ownership plans to fully motivate employees and achieve the long-term development and layout of the company. We believe that the initial reasonable PE range of the platform-level layout company was 180-190 times, and the corresponding company's reasonable valuation in 2017 was 14.4-15.2 yuan, giving it a “careful recommendation” rating.
Risk warning
1) The advancement of the vertical field of electronic inspection and quarantine fell short of expectations; 2) the operation of the IoT public service platform fell short of expectations; 3) the advancement of the information cloud service platform for small and medium-sized enterprises fell short of expectations.