Main points:
In the first three quarters of 2016, the company achieved operating income of 414.6866 million yuan, an increase of 18.90 percent over the same period last year, but the net profit attributed to shareholders of the parent company was 47.0191 million yuan, down 27.59 percent from the same period last year.
The main reason is that the proportion of sales expenses and management expenses of the company is still high, and when the profit base of the main business is small, the decline of interest income, investment income and non-operating income has a great impact on the net profit belonging to the shareholders of the parent company.
USBKEY security chip market has changed from the explosive period of the industry to the period of stable development, with high market maturity, high brand concentration and fierce competition. The company actively faces the changes in the industry and promotes the USBKEY-related products of mobile terminals, which is expected to share the development of the new market for mobile terminal security requirements.
At present, the domestic financial IC card chip market is highly monopolized by foreign giants, which poses a potential threat to China's financial security. Therefore, chip localization has been gradually put on the important agenda, domestic chips in 2017 may enter a key turning point. While maintaining the leading position in market segments such as social security cards and resident health cards, the company also continues to actively seize the development opportunity of the localization of financial IC card chips.
Although RCC technology is not the mainstream payment scheme at present, the company believes that the innovation and development of RCC independent technology innovation and its application mode is in line with the development requirements of the national information security strategy and the company strategy in the long run. The company will continue to strengthen the research and development and application of related products.
Investment advice:
Under the premise of the steady growth of the company's existing USBKEY security chips, smart card chips, trusted computing and RCC Mobile, and regardless of the company's other new product research and development and new government subsidies, we expect the company's EPS in 2015 and 2016 to be 0.142 yuan and 0.163 yuan respectively, corresponding to 140.42 times and 122.33 times respectively. The current valuation of the company is more balanced based on the latest 143.19 times the median Pram E in the integrated circuit industry. We maintain its "neutral" investment rating for the time being, and we will continue to pay attention to the market promotion of RCC technology.
Risk Tips:
Market competition risk; accounts receivable recovery risk; policy risk; new product research and development risk.