Events:
Recently, we have investigated the company to understand the recent development of the company's cross-border payment business.
Comments:
1. New customers of cross-border payment business are expected to gradually land in the future to fill the gap in the flow decline of Uber customers. The company acquired 26% of Huiyuantong business shares in the previous period, and in the future, we think that the company will not rule out the possibility of continuing to acquire its remaining shares to complete its actual holding and consolidation. We are optimistic about the impact of Huiyuantong business on cross-border payment business at home and abroad. as Uber, one of the company's largest customers, was incorporated into DiDi Global Inc., we expect traffic to decline in the future, but the company has added new customers in time, and the overall traffic is expected to reach US $5 billion-7 billion in 2017, which can offset the negative impact of the decline in Uber.
2. The rising level of fees affects short-term profits and will return to normal in the future. as the additional issuance proposal for the acquisition of Huiyuan Tong is finally withdrawn, the intermediary business expenses paid by the company in the previous period must be spent in the current year and cannot be amortized to 17 years. In addition, in order to acquire 26% of the equity, the company has increased its debt level, and the debt ratio has increased by 13 percentage points from 23%. We estimate that the cost level will increase by 40 million in 2016, leading us to believe that corporate profits may be smaller than expected in 2016, but overall, fee overruns this year may reduce the cost level in 2017. therefore, we believe that as new customers land and fees return to normal in 2017, performance is still likely to exceed market expectations.
3. The cross-border payment industry chain continues to be laid out, which is currently lower than the equity incentive price and maintains the "highly recommended-A" rating.
From a traditional manufacturer mainly engaged in the export of stationery, through 15 years' acquisition of Internet marketing company Lingyun Media, 15 years' participation in Poyuan Technology, online cross-border e-commerce around the world, and 16 years' participation in Huihui Yuantong, a cross-border payment company, the company has carried out equity incentive plans to achieve the harmonization of interests. We believe that the company has gradually realized the transformation from traditional manufacturing to Internet advertising marketing, cross-border e-commerce, cross-border payment and other multi-business integrated service providers, and the sustainable layout of the cross-border payment industry chain may be more desirable in the future. At present, the stock price is lower than the equity incentive exercise price of nearly 20 yuan announced by the company in the previous period. We maintain the expected EPS of 2016Mel 2018 of 0.31,0.35,0.38 yuan, respectively, and maintain the "highly recommended-A" rating.
Risk Tip: Uber China business operation risk, Huiyuan Tong commission rate decline.
