The results in the first three quarters exceeded expectations.
Gao Hong announced its results for the first three quarters: operating income was 5.9 billion yuan, up 23.72% over the same period last year; net profit attributed to the parent company was 40.867 million yuan, up 27.22% from the same period last year, corresponding to 0.0691 yuan per share. The net profit of returning home is 10.5% higher than CICC expected.
Trend of development
The growth rate of revenue accelerated and the rate of expenses decreased slightly. Revenue in the third quarter rose 36% from a year earlier, up from 16.33% in the first half. Due to the obvious decline in the gross profit margin of the enterprise information business, the overall gross profit margin fell 1.5% in the first three quarters compared with the same period last year. However, due to the decline in the expense rate, the net profit margin remained unchanged from a year earlier. The effect of the company's fee control is remarkable.
The business is developing steadily. The revenue of enterprise information business is growing rapidly, but the gross profit margin is declining.
IT sales business is growing steadily and gross profit margin is stable. This trend is expected to continue in the future.
Internet lottery business is still unable to be carried out due to national policy restrictions.
Trusted computing and vehicle networking are still in layout and can be expected in the future. The company publishes independent and controllable trusted series of products and management platform. At present, the maturity and integrity of the products are in the lead in China. At the same time, the company has also carried out more in-depth research and development in the fields of vehicle networking and information security. Revenue is expected to contribute in the future.
The fixed increase is progressing smoothly and has been approved unconditionally by the Securities Regulatory Commission. The company plans to acquire 41.77% of Gao Hong Dingheng's shares held by Nanjing Qingya at a price of 319.5 million yuan, with a reserve price of 11.6 yuan per share, and raise 155 million yuan. The trading plan has been approved by the CSRC and will thicken the company's performance in the future.
Profit forecast
Since most of the company's earnings are concentrated in the fourth quarter, we keep our earnings per share forecast for 2016 and 2017 unchanged.
Valuation and suggestion
At present, the company's share price is equivalent to 62 times the price of PCME in 2017. We maintain a neutral rating and a target price of 13.14 yuan, which is 3.45% lower than the current share price. The target price corresponds to 60 times Pmax E in 2017.
Risk.
Fierce competition in the enterprise information market has led to a decline in profit margins; IT sales business is not up to expectations; Internet lottery policy is not clear; car networking and trusted computing have been unable to contribute revenue.